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Powerpoint and Video Guides

Resources for preparing for your investment banking interview.

Accounting

Advanced Question 1 - How does a $120 purchase of an annual subscription affect the 3 statements?

Follow along with a walkthrough of a common type of accounting question you may be asked in a investment banking interview.

FIC Comps

Question - What are multiples? Why use EV/EBITDA?

What are multiples? Why are they used? What are Equity Value Multiples? What are Enterprise Value Multiples?

This video explores some basic concepts of Comps.

FIC DCF

Question - Walk me through a DCF.

“Walk me through a DCF” is one of the most fundamental (and common) questions in an investment banking interview. Follow along with Finance Interview Coach Josh Jia while he walks through the 6 most common steps.

FIC Stock Pitch

Question - Pitch me a stock.

The stock pitch is one of the most common investment banking interview questions. Although verbally presenting without a deck is very different than how you would ultimately present the work in your firm, having a clear structure to your answer is extremely important.

Finance Articles & Blog

Walk me through how you would calculate revenue synergies.

First, we should understand the revenue model. For example, it could be a quantity x price model, subscribers x ARPU model, etc. If the revenue synergies come from increasing one of these variables in the revenue model, such as an increase in subscribers as a result of cross-selling, then we should estimate how many more […]

Why is goodwill created in an acquisition?

When an acquiror pays more than the book value for a company, the excess amount over the book value is called goodwill. The acquiror can finance the deal through cash, debt, or equity. If the company finances the deal through cash, then cash will go down on the balance sheet. Assets will go up by […]

A company with a higher P/E acquires a company with a lower P/E in an all-stock deal. Is this accretive or dilutive?

This is accretive. A higher P/E means that you are paying more for every dollar of earnings, since the numerator is stock price and the denominator is earnings. If we take the reciprocal of P/E, which is earnings per share / stock price, then a higher P/E results in a lower return on equity. A […]

Why would an acquirer not use cash?

The acquirer may not have enough cash, or they have set aside cash on the balance sheet for another purpose such as: Perform share buyback Pay out dividends Acquire another company

What is the cost of cash in an M&A transaction?

The cost of cash is the opportunity cost of the cash, which is the after-tax interest rate that could have been earned if the cash was left in the bank or invested into marketable securities (also known as cash equivalents). Marketable securities are low risk and highly liquid, and include:

When would you use debt to buy a company?

You would use debt: if you don’t have enough free cash on the balance sheet, have the debt capacity, and would prefer a cheaper source of financing than equity. You may also use debt if you can get favorable terms (such as a low interest rate) on the credit agreement because the target has recurring […]

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