D&P Interviews

I interned at D&P last summer so I am familiar with the interview process. It should be noted, however, that this was for the Philadelphia office- the interview process could possibly differ across offices.

With that in mind, it was fairly straight forward. I had four interviews: one technical, one brainteaser, two fit. The brainteasers were ultimately unchallenging and for the technical interview, I kind of steered it into the direction I wanted in order to highlight my own strengths. Fit was fit- nothing really surprising there.

May I ask which office you're interviewing for?

i had my interview a couple of days ago with D&P. I won't bother getting into the fit questions but here are the technical;

1) How do you calculate the WACC?
2) In WACC, why do you multiply cost of debt by (1-t)
3) Walk me through a DCF
4) How does increasing depreciation affect the DCF
5) What are the main components of an income statement and a balance sheet

all of them are simple. don't worry.

Well, this is going to be my first interview with them, and it is on-campus. When they asked me to apply online, I signed up for the LA office.

Can anyone provide some insight about this?

I assume it increases FCF through its effect on the operating activities in statement of cash flows, because depreciation is added back, increasing net income. Thus, it increases the numerator/CF in DCF analysis, and adds value to the company?

I thought FCF increases.

FCF = Net Income + Depreciation/Amortizatoin - CapEx - Increase in Working Capital... so increase in depreciation ... increases FCF... am I wrong?

No, you are correct.

On a side note, I was always taught that FCF = EBIT(1-T) + D/A + ..., rather than Net Income.

Do you maybe use Net Income for equity valuation and EBIT(1-T) for firm valuation, because it deals with paying all holders of capital?

I always though EBIT(1-T) = Net Income. Guess I was wrong.

It's just levered versus unlevered FCF. Conventional method is unlevered (EBIT(1-t)=NOPAT ... before interest, after taxes).

Since we are on that note, do you think you can explain levered vs unlevered, as far as how interviewers want you to explain it to them.

the answer to that, is that it increases FCF, and the DCF.

as for calculating unlevered and levered beta, there is a formula for that.

When you discount by WACC, you are already accounting for capital structure of the firm. Therefore, it makes sense to use unlevered cash flows, so you don't double count the tax-savings advantages of debt. The other way to do it is to project equity cash flows and discounting by Ke instead of by WACC (rarely done in banking - only done in bschool/academics).