Financial Analysis
Solved Exam Questions
Course Introduction
Financial Analysis is a comprehensive course designed to equip students with the skills necessary to interpret and evaluate financial statements and performance. Covering key concepts such as ratio analysis, trend analysis, and cash flow assessment, the course explores how financial data is used to assess the viability, stability, and profitability of businesses. Students will learn how to use financial tools and techniques to make informed decisions, understand company valuations, and identify financial strengths and weaknesses. Emphasis is placed on real-world application through case studies and practical exercises, preparing students for roles in finance, investment, and business management.
Recommended Textbook
Investment Banking Valuation Leveraged Buyouts and Mergers and Acquisitions by Joshua Rosenbaum
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7 Chapters
201 Verified Questions
201 Flashcards
Source URL: https://quizplus.com/study-set/3930 Page 2
Chapter 1: Comparable Companies Analysis
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28 Verified Questions
28 Flashcards
Source URL: https://quizplus.com/quiz/78386
Sample Questions
Q1) How should one adjust net income when using the If-Converted method for a comparable companies analysis?
A)Adjust net income downward
B)Adjust net income upward
C)Make no adjustment to net income
D)It depends
Answer: B
Q2) Based on Moody's rating scale, what grade is Baa1 considered?
A)High quality
B)Highly speculative
C)Medium grade
D)Extremely speculative
Answer: C
Q3) What happens to the enterprise value EV) if a company issues equity and uses the proceeds to repay debt?
A)The EV goes up
B)The EV remains the same
C)The EV goes down
D)It depends
Answer: B
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Chapter 2: Precedent Transactions Analysis
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) How is the equity value calculated for an M&A transaction when the target company is private?
A)Share price multiplied by shares outstanding
B)Acquirer's price per share multiplied by shares outstanding
C)Enterprise value less assumed/refinanced net debt
D)There is no equity value for a private company
Answer: C
Q2) What situation would lead to a higher purchase price for a company?
A)Merger of equals
B)Targeted auction
C)Hostile situation
D)Private equity deal
Answer: C
Q3) Which kind of buyer generally pays the most for an acquisition?
A)Financial buyer
B)Strategic buyer
C)Private equity
D)Financial sponsor
Answer: B
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Page 4
Chapter 3: Discounted Cash Flow Analysis
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) Which expense reduces the life of an intangible asset?
A)Depreciation
B)Accelerated Depreciation
C)Amortization
D)Capex
Answer: C
Q2) In a DCF analysis, the target's projected FCF and terminal value are discounted to the present and summed to calculate the target's:
A)Enterprise value
B)Market cap
C)Equity value
D)Current value
Answer: A
Q3) What happens to WAAC as the proportion of debt in a capital structure increases?
A)It stays the same
B)It decreases
C)It increases
D)It depends
Answer: B
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Page 5
Chapter 4: Leveraged Buyouts
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) What is the main source of financing in a leveraged buyout?
A)Debt
B)Equity
C)Assets
D)Cash
Q2) What kind of loan is needed if the "take-out" securities deteriorate between the signing and the closing of an LBO?
A)Bridge loan
B)Second lien term loan
C)PIK
D)Mezzanine debt
Q3) An ABL facility is generally secured by a first priority lien on which of the following assets?
A)PP&E
B)Deferred tax asset
C)Inventory
D)Goodwill
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Chapter 5: Lbo Analysis
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28 Flashcards
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Sample Questions
Q1) Calculate implied enterprise value given the following details.
<u><b>Details:</b></u>
Offer price per share: $20.0
Fully diluted shares outstanding: 100
Total debt: $200.0
Cash: $100.0
A)$2,000
B)$1,900
C)$2,100
D)$1,700
Q2) Which part of the pro forma balance sheet is affected by the debt schedule?
A)Long-term liabilities
B)PP&E
C)Short-term assets
D)Goodwill
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Chapter 6: Sell-Side Ma
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33 Verified Questions
33 Flashcards
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Sample Questions
Q1) Which of the following is performed during the first stage of the auction process?
A)Prepare confidentiality agreement
B)Contact prospective buyers
C)Receive board approval
D)Conduct management presentation
Q2) In which type of sale process does a seller have the least leverage?
A)Negotiated sale
B)Stock sale
C)Targeted auction
D)Broad auction
Q3) In which of the following scenarios would a sell-side advisor consider running a broad auction?
A)Seller is flexible regarding timing
B)Seller is flexible regarding potential business disruption
C)Confidentiality is not a priority
D)All of the above
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Chapter 7: Buy-Side Ma
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28 Verified Questions
28 Flashcards
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Sample Questions
Q1) Which of the following is the cheapest form of financing?
A)Cash on hand
B)Debt financing
C)Equity financing
D)Stock sale
Q2) Which type of corporation is taxed separately from its shareholders?
A)S corporation
B)C corporation
C)LLC
D)All corporations
Q3) If a merger or acquisition is not immediately accretive, should the acquirer go through with the transaction? Why or why not?
A)No, the transaction will dilute the EPS and destroy shareholder value
B)Yes, accretion/dilution is not important
C)It depends; expected synergies and growth prospects may make the deal accretive and therefore create shareholder value
D)No, once a deal is dilutive it cannot become accretive
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