Interview Question: Which company to invest in?

Hey,

In a recent PE interview, I was given the financial statements of 2 companies and asked which one I would invest in.

It was unclear to me how to effectively tackle this question and just went one checking against common LBO criteria (low WC requirements, capex etc.) However, I felt this wasn’t the right way of approaching the question because it was overtly qualitative. I would assume they would want you to be more quantitative in your response – maybe talk about expected growth rates, margin expansion opportunities, maybe even run a quick LBO.

Nevertheless, I am really stuck with this type of questions. How would you go about answering this question??

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