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Workspace/Technical Question Bank

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Technical Question Bank

Original questions that test mechanics, calculations and judgement. Practise deliberately, then revisit what needs work.

38 original questions · quality first

Timed mode

Custom session lengthPrioritises due reviews, weak concepts and your experience level.

38 questions

Sources and assumptions included in every solution

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Technical Question Bank

A company records $10m extra depreciation at a 25% tax rate. Walk through all three statements.

Inventory worth $20m is purchased on credit. What changes immediately?

A customer pays $12m upfront for a service delivered evenly over a year. What happens at receipt and after one month?

Why can a profitable company run out of cash?

EBIT is $80m, tax rate 25%, D&A $10m, capex $18m and operating NWC increases $7m. Calculate unlevered FCF.

How does issuing $50m of debt affect the three statements on the issuance date?

Why can stock-based compensation be added back in CFO but still have an economic cost?

What creates a deferred tax liability when tax depreciation exceeds book depreciation?

Equity value is $500m, debt $150m and cash $40m. What is enterprise value?

Why is EV / EBITDA conceptually consistent while equity value / EBITDA is not?

A company has 100m shares and 10m options with $8 strike; stock is $20. Calculate diluted shares using the treasury stock method.

Why is non-controlling interest usually added in an enterprise value bridge?

If a company raises debt and leaves the cash on its balance sheet, does EV mechanically change?

Explain a DCF without simply reciting a formula.

A $121m unlevered cash flow arrives in two years. WACC is 10%. What is its present value?

Year-five FCF is $50m, perpetual growth is 2%, WACC is 10%. What is terminal value at year five?

Risk-free rate 4%, beta 1.2, equity risk premium 5%. Estimate cost of equity with CAPM.

Equity weight 75%, debt weight 25%, cost of equity 12%, cost of debt 6%, tax rate 25%. What is WACC?

Two businesses trade at the same EV / EBITDA. Are they equally cheap?

How do comparable companies and precedent transactions differ?

Give a credible acquisition rationale and explain what could go wrong.

Buyer net income $100m on 50m shares acquires $20m net income for $200m cash. After-tax cash yield is 3%. Is EPS accretive?

Buyer earns $100m on 50m shares priced at $40. It buys $20m target earnings for $400m in stock. What is pro forma EPS?

Purchase consideration is $300m and fair value of identifiable net assets is $220m. Calculate simplified goodwill.

Why can an EPS-accretive acquisition destroy value?

What is a quality-of-earnings review trying to establish?

Entry equity is $100m and exit equity is $250m after five years. Calculate MOIC and annualised IRR.

Debt is $300m, cash $40m and EBITDA $60m. Calculate gross and net leverage.

Entry EV $500m, entry debt $300m. Exit EV $600m and debt $180m after five years. What is MOIC?

Why is the highest leverage not always the best LBO capital structure?

What is the difference between secured and unsecured debt?

How does ECM work differ from DCM work?

Why can EV / EBITDA be a poor primary metric for a bank?

What changes when advising a distressed company instead of a healthy acquirer?

Why do fixed-rate bond prices generally fall when market yields rise?

How might higher interest rates affect M&A activity?

What does a widening credit spread tell you, and what does it not tell you?

An inverted yield curve appears. How would you discuss it without overstating certainty?