Adventis Level II

A company has unlevered free cash flow in years 1-5 of $125, $150, $165, $180, and $250. What is the present value of the terminal value assuming a 11% discount rate and a 3% perpetuity rate?

$1,910

If a company is announced to be sold for a transaction value of $15 million and it has $2.5 million of debt and $2 million of cash, what is the purchase price of the company?

$14.5 million

Companies A and B both have revenue of $1,000 and EV/revenue multiples of 1.5x. Company A has an EV/EBITDA of 6.0x and Company B has an EV/EBITDA of 8.0x. What is Company A's EBITDA?

$250

You receive a loan for $1,000. The loan accumulates interest at a rate of 6.5%. How much interest will you owe in 4 years?

$286.47

A company has unlevered cash flow in years 1-5 of $10, $12.5, $13.5, $14, $15. EBITDA in year 5 is $10. What is the present value of the terminal value, assuming a discount rate of 12% and an EBITDA multiple of 6.0x.

$34

A company has unlevered cash flow in years 1-5 of $100, $125, $135, $140, and $150. What is the value of the 5 year projection period assuming a 15% discount rate and a 3% perpetuity rate?

$425

If you have unlevered free cash flow of $10 in year 5, a perpetuity growth rate of 2.5%, and a discount rate of 12%, what is the terminal value in today's dollars?

$61.22

If you have unlevered free cash flow of $100 in year 5, a perpetuity growth rate of 3% and a discount rate of 12%, what is the terminal value in today's dollars?

$649.39

An investor puts $40 million of equity capital into a business in exchange for 90% equity stake. Three years later, the business is old for a $90 million transaction value. When it is sold, it has $20 million of debt and $5 million of cash. What is the purchase price of the deal at exit?

$75

If a company is announced to be sold for a transaction value of $10 million and ti has $3 million of debt and $1.5 million of cash, what is the purchase price of the company?

$8.5 million

An investor puts $50 million of equity into a business in exchange for 90% equity stake. Three years later, the business is sold for a $90 million transaction value. When it's sold, it has $15 million of debt and $3 million of cash. What is the cash-on-cash multiple to the investor?

1.4x

An investor puts $40 million of equity into a business in exchange for a 90% equity stake. Three years later, the business is sold for a $90 million transaction value. When it's sold, it has $10 million of debt and $3 million of cash. What is the cash-on-cash multiple to the investor?

1.9x

An investor puts $40 million of equity capital into a business in exchange for 90% equity stake. Three years later, the business is sold for $90 million transaction value. When it's sold, it has $10 million of debt and $3 million of cash. What is the annualized return to the investor?

23.1%

Companies A and B both have revenue of $1,250 and EV/revenue multiples of 1.5x. Company A has an EV/EBITDA of 8.0x and Company B has an EBITDA margin of 25%. What is company B's EBITDA multiple?

6.0x

cash conversion cycle is

DSO + DIO -DPO

a common proxy for cash flow is

EBITDA

An LBO model does NOT include:

WACC

which of the following DOES belong with enterprise value in a multiple?

all of these options belong with enterprise value (EBIT, rev, EBITDA)

tangible net worth is defined as

book equity less goodwill and intangibles

if the quick ratio is significantly lower than the current ratio, the most likely explanation for this is

company carries significant levels of inventory

the 6th C is

competition

all of the following are examples of leverage covenants except for

current assets to current liabilities

which of the following pairs do NOT belong together

enterprise value and net earnings

what is the formula for enterprise value?

equity value plus debt less cash

True or false: a good ratio to measure liquidity of a firm is debt/EBITDA

false

All else being equal, what happens to investor returns if interest expense on debt increases?

investor returns decrease

All else being equal, when a deal is funded with more equity, what happens to the debt/EBITDA ratio?

it is reduced

which of the following does NOT belong with enterprise value in a multiple?

net earnings

debt service is defined as

the required principal amortization and interest

what is the primary difference between trading comparable and acquisition comparables?

trading comparables change as the share price changes in the stock market, whereas acquisition comparable are based on historical M&A transactions and remain static

True or false: financial covenants can be thought of as guard rails to try and keep the borrower on the road

true

True or false: time series analysis is beneficial and it analyzes financial performance over time

true

Which of the following statements are false in regards to calculating terminal value?

unlike the perpetuity method, in the exit multiple method the terminal value is not discounted back five years to arrive at the present value

Which of the following statements about a P/E multiple is false?

It isn't affected by non cash expenses