Exam 18: Financial Modeling and Pro Forma Analysis

What is the free cash flow to equity holders for a firm with free cash flow of $11,000, after-tax interest expense of $2,000, and an increase in debt of $2,000?

(Multiple Choice)

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Question 41

Pledrea Inc. has EBITDA at the forecast horizon of $10,000. Its EBITDA multiple is 11. What is the terminal value of the firm at the forecast horizon?

(Multiple Choice)

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Question 42

Internal growth rate assumes that the firm can finance investments via sale of debt.

(True/False)

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Question 43

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation enterprise value of Ideko in 2015 is closest to ________.

(Multiple Choice)

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Question 44

When making long term plans, any increases in and reflect capital structure decisions that require managers to actively raise capital.

(Multiple Choice)

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Question 45

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation levered price-earnings ratio of Ideko in 2015 is closest to ________.

(Multiple Choice)

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Question 46

Long term financial planning helps a financial manager in budgeting but has little to do with understanding how the business operates.

(True/False)

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Question 47

________ is the amount of additional external financing needed to fund planned increases in assets.

(Multiple Choice)

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Question 48

What is minimum required cash?

(Essay)

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Question 49

The sustainable growth rate assumes that the firm will raise no new debt financing.

(True/False)

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Question 50

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 9.4, then the continuation EV/Sales ratio of Ideko in 2015 is closest to ________.

(Multiple Choice)

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(43)

Question 51

How do we know if expansion is a good idea for the firm?

(Essay)

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Question 52

LG Inc. has done a long-term forecast of its balance sheet. The projected total assets for the next year are $300 million. The current liabilities are projected to be $170 million and other long term liabilities are $70 million. How net new financing is needed in the following year?

(Multiple Choice)

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(43)

Question 53

Pledrea Inc. has EBITDA at the forecast horizon of $10,000. Its EBITDA multiple is 12. What is the terminal value of the firm at the forecast horizon?

(Multiple Choice)

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(34)

Question 54

Compute the value of a firm with free cash flows of $1,000, $2,500, and $3,000 over the next three years, a terminal firm value of $40,000 after three years, and the unlevered cost of capital is 15%. Assume that the interest rate tax shield is zero.

(Multiple Choice)

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Question 55

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how and will grow with sales.

(Multiple Choice)

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Question 56

For valuing a planned expansion, in addition to forecasting cash flows we need to estimate the firm's continuation value.

(True/False)

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Question 57

A firm has $70 million in equity and $30 million of debt, it pays dividends of 30% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

(Multiple Choice)

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Question 58

Forecasting a balance sheet with percent of sales method requires two passes-a first pass to determine financing needs and a second pass that shows the sources and amounts of financing.

(True/False)

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Question 59

A firm has $40 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

(Multiple Choice)

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Question 60

Showing 41 - 60 of 95

Exam 18: Financial Modeling and Pro Forma Analysis

What is the free cash flow to equity holders for a firm with free cash flow of $11,000, after-tax interest expense of $2,000, and an increase in debt of $2,000?

Pledrea Inc. has EBITDA at the forecast horizon of $10,000. Its EBITDA multiple is 11. What is the terminal value of the firm at the forecast horizon?

Internal growth rate assumes that the firm can finance investments via sale of debt.

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation enterprise value of Ideko in 2015 is closest to ________.

When making long term plans, any increases in ________ and ________ reflect capital structure decisions that require managers to actively raise capital.

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 8.5, then the continuation levered price-earnings ratio of Ideko in 2015 is closest to ________.

Long term financial planning helps a financial manager in budgeting but has little to do with understanding how the business operates.

________ is the amount of additional external financing needed to fund planned increases in assets.

What is minimum required cash?

The sustainable growth rate assumes that the firm will raise no new debt financing.

Use the tables for the question(s)below. Pro Forma Income Statement for Ideko, 2010-2015 Pro Forma Balance Sheet for Ideko, 2010-2015 -Assuming that Ideko has an EBITDA multiple of 9.4, then the continuation EV/Sales ratio of Ideko in 2015 is closest to ________.

How do we know if expansion is a good idea for the firm?

LG Inc. has done a long-term forecast of its balance sheet. The projected total assets for the next year are $300 million. The current liabilities are projected to be $170 million and other long term liabilities are $70 million. How net new financing is needed in the following year?

Pledrea Inc. has EBITDA at the forecast horizon of $10,000. Its EBITDA multiple is 12. What is the terminal value of the firm at the forecast horizon?

Compute the value of a firm with free cash flows of $1,000, $2,500, and $3,000 over the next three years, a terminal firm value of $40,000 after three years, and the unlevered cost of capital is 15%. Assume that the interest rate tax shield is zero.

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how ________ and ________ will grow with sales.

For valuing a planned expansion, in addition to forecasting cash flows we need to estimate the firm's continuation value.

A firm has $70 million in equity and $30 million of debt, it pays dividends of 30% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

Forecasting a balance sheet with percent of sales method requires two passes-a first pass to determine financing needs and a second pass that shows the sources and amounts of financing.

A firm has $40 million in equity and $20 million of debt, it pays dividends of 20% of net income, and has a net income of $10 million. What is the firm's internal growth rate?

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

Time Value of Money: an Introduction

Time Value of Money: Valuing Cash Flow Streams

Interest Rates

Bonds

Stock Valuation

Investment Decision Rules

Fundamentals of Capital Budgeting

Stock Valuation: a Second Look

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

The Cost of Capital

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Working Capital Management

Short-Term Financial Planning

Option Applications and Corporate Finance

Mergers and Acquisitions

International Corporate Finance

Leasing

Insurance and Risk Management

Corporate Governance

Filters

When making long term plans, any increases in and reflect capital structure decisions that require managers to actively raise capital.

The asset and liability side of a pro forma balance sheet projection will not balance, in general, unless we make assumptions about how and will grow with sales.