TEST 1

Question 1

Non-Operating Income

Answer 1

Income generated by investments the firm has made in assets that are unrelated to the firm’s primary business

Question 2

Operating Income

Answer 2

Income generated by the firm’s core business

Question 3

Is cash flow the same as net income?

Answer 3

No. Income is prepare using accrural. CF is when the cash is spent and received

Question 4

EBIT

Answer 4

What do you take out? Look for the one time expenses to eliminate and always take out investements

Question 5

Where is working capital on balance sheets?

Answer 5

I don’t know.

Question 6

Cost Approach vs. Equity Approach to carrying investments

Answer 6

Accounting Methods

Question 7

Working Capital Equation

Answer 7

Balance Sheet - Assets Minus Liabilities

Question 8

Working Capital Def

Answer 8

Cash used to operate the business

Question 9

In Valuations what do you do with investments?

Answer 9

If there is income from investments, you should ignore it.

Question 10

What is the EBITDA multiple?

Answer 10

Find out

Question 11

EBIT(1-T) + Depr - Capex - Delta NWC

Answer 11

Valuation Formula

Question 12

What does it mean to test for impairment?

Answer 12

The value is worthless and needs to be taken out of the value

Question 13

Review the Minority Share Calcs

Answer 13

Non-controlling interest, and Goodwill cals

Question 14

Mezzanine Debt

Answer 14

Between Liability and Equity - mixture of two things - now as its own equity

Question 15

What are cash flows?

Answer 15

Change in cash balance for the period