What are some medium-level technical questions?
What are some technical questions that aren't as hard as merger model or accretion/dilution math questions, but not as easy as 'tell me three ways to value a company'
I assume most IB interviews are filled with more of the medium-level questions instead of the really hard and really easy ones.
Some examples that come to mind; understanding the differences between Enterprise value and equity value; when to use multiples to use aside from EV/EBITDA or P/E; how to value a private company, anything related to WACC
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Interviewers love asking about depreciation. How does an increase of $10 of depreciation affect EBITDA, free cash flow, net earnings, taxes, etc. Not too tough of a question if you know your stuff, but answering it correctly means you have a decent idea of how things tie together.
$50 Accrued Expense
$100 stock issuance to employee
$100 Factory purchase year one (cash), write-off of asset year two (10% depreciation)
$50 Increase in Payable/Receivable, followed by $50 decrease in Payable/receivable
$10 Dividend issuance to shareholder (With cash or with Debt)
What would cause an decrease in cash flows, with even though revenues/Net Incomes are continuing to increase?
Answer: Operating, Investing, and Financing activities
For example, loss of receivables (excluding A/R), payment of payables, required interest payments, CapEx increasing though purchases of PPE, Dividends, principal repayments, less stock issuances
Payment of payables wouldn't lead to revenues/net incomes to increase though
But wouldn't it lead to an increase in Net Working Capital (a use of cash), which you deduct when calculating FCF?
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I got asked what the advantages and disadvantages of a DCF valuation was compared to other methods with the expectation that you provide 2-3 advantages and disadvantages
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