couple interview questions.. help
would you expect A/P days to increase or decrease in its growth phase?
Same but with A/R days ?
How do you value a company with no earnings? (project until u have stable cash flows?)
How do you value a company with no history? (dcf with shaky assumptions, comps with businesses with similar business models?)
how do you go from p/e to ROE?
Also, if anyone else has been asked any toughter technicals (beyond whats in vault finance guide/"Cs phone interview thread") please post!
thanks guys
With respect to A/P and A/R during growth periods I would say they both lengthen. This is because:
A/P - The company's cash would be first used to fund growth so it might in turn put off A/P A/R - The company is growing maybe to a new customer base which could increase the payoff days
However, one can make an argument that it will remain unchanged.
How do you value a company with no earnings? Look at other technicals that are common in its industry. In tech in can get as barebones as how many web page hits a company gets in relation to its peers (this is really how they valued some tech companies when the bubble burst). In mining it could be how many tons of materials are mined per week in relation to its peers and their earnings, etc. There is def no one answer, show creativity.
How do you value a company with no history? You can look at top management and where they were prior. Their track record. The niche of their product. Etc
How do you go from Roe to P/E? Or Roe to Ke?
bump.. anyone on that p/e roe question?/
(market cap) / (P/E * Shareholder's Equity)
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