Best Accounting Technicals
Monkeys.
Please throw some good accounting technicals on here to make a list. I’ve a big technicals interview for a PE firm next week, I appreciate all contributions, as I’m sure does/will everyone else.
Feel free to link pages/posts from WSO, I had a Quick Look but could find no mega-threads. Website links are also welcomed!
Hopefully we can make this a thread to come back to. I’ll start us off….
Classic walk me through the influence of depreciation change (increase/decrease) in the 3 statements.
Explain diff between Gaap and Non-Gaap metrics.
Expensing vs capitalising an item
Immediate impact of 100m debt landing on the fin statements.
Based on the most helpful WSO content, here are some additional accounting technicals you can consider adding to your list for PE interview prep:
Walk me through the calculation of Free Cash Flow (FCF) and its importance in valuation.
Explain the difference between Term Loan A and Term Loan B and their impact on financial statements.
Walk me through credit metrics and their relevance in assessing a company's financial health.
Discuss the calculation and implications of goodwill in an LBO scenario.
Explain the concept of Net Working Capital and its role in valuation models.
What are the key differences between operating profits and gross profits, especially in the context of software-focused businesses?
Discuss the importance of LTV/CAC (Lifetime Value to Customer Acquisition Cost) and Net ARR (Annual Recurring Revenue) in software business evaluations.
How does PIK (Payment-in-Kind) interest work, and how does it affect the financial statements?
What are the flaws of using EBITDA as a valuation metric, and what alternatives might be more reliable?
Explain the impact of a $100M debt issuance on the three financial statements.
For more detailed discussions and insights, you can explore these threads on WSO: - https://www.wallstreetoasis.com/forum/private-equity/private-equity-int…</a">Private Equity Interview Questions - 13 Topics to Know - https://www.wallstreetoasis.com/forum/private-equity/pe-recruiting-tech…</a">PE Recruiting Technical Questions (Software Specific)
Good luck with your interview prep, and remember to practice walking through these concepts clearly and concisely!
Sources: Private Equity Interview Questions - 13 Topics to Know, Private Equity Interview Questions - 13 Topics to Know, Beyond the guide: a list of real interview technical questions, PE recruiting technical questions (software specific), Associate guide on analyzing an income statement
Explain key differences bw IFRS and GAAP (ie ASC 606 v IFRS 15 rev rec)
How does a discount or premium on a debt issue impact the P&L?
How does fx impact the P&L? When is it in OCI vs reported in earnings?
Calculate DSO and the cash conversion cycle and explain its trend.
A few software examples:
Anyone have good examples of tax basis accounting questions?
Give me three statements for (1) the DTA for an NOL being generated and unwinding, and (2) the DTL for accelerated depreciation being generated and unwinding
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