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30 questions across Accounting, EV / Equity, DCF, and LBO. Pick one to start.

ModuleDifficulty

Math-Verified deterministic engine, not AI vibesAI-Graded (Preview) rubric-guided model, labeled honestly

Depreciation expense increases by $10. Tax rate is 40%. Walk me through the three financial statements.

depreciation

Why is depreciation a non-cash expense, and why does it still matter for valuation even though it does not consume cash? Explain in a way that connects the income statement, cash flow statement, and the unlevered free cash flow used in a DCF.

depreciation_concept

AccountingIntermediateMath-Verified

A company issues $50M in new debt. Walk me through the three financial statements.

debt_issuance

AccountingIntermediateAI-Graded (Preview)

What are deferred tax assets and deferred tax liabilities, where do they come from, and walk me through one example of each. Why does the existence of a large DTA on the balance sheet sometimes signal a concern rather than a benefit?

deferred_taxes

AccountingIntermediateAI-Graded (Preview)

In an M&A deal, the buyer and seller agree to set the purchase price assuming a "normalized" level of net working capital at close. What is NWC in this context, why does it need to be normalized, and how does a deviation from the normalized target at close adjust the purchase price?

nwc_normalization

AccountingProAI-Graded (Preview)

A European retailer signs a 10-year operating lease on a flagship store with annual rent of €5M and an incremental borrowing rate of 5%. Walk me through the day-one balance sheet recognition under IFRS 16, the recurring P&L treatment, and contrast both with the legacy IAS 17 / ASC 840 operating-lease accounting that this replaced. Where this matters for EBITDA, FCF, and EV: be specific.

lease_capitalization

AccountingProAI-Graded (Preview)

A buyer pays $500M for a target with $200M of identifiable net assets at fair value. How is the $300M premium recognized, and walk me through the post-acquisition impairment-testing approach under IFRS (IAS 36) versus US GAAP (ASC 350). Where do the two frameworks differ in practice, and what does that mean for an analyst comparing reported goodwill impairments cross-border?

goodwill_impairment

AccountingProMath-Verified

A company records $15M in stock-based compensation expense. Tax rate is 25%. Walk me through the three financial statements. Assume book tax expense equals cash tax expense in the same period (no deferred tax timing differences from ASC 718 / IAS 2 vesting or exercise mechanics).

stock_based_compensation

DCFBeginnerAI-Graded (Preview)

Walk me through a DCF analysis at a high level.

dcf_overview

DCFIntermediateAI-Graded (Preview)

Walk me through how you calculate WACC.

wacc

DCFIntermediateAI-Graded (Preview)

What is the mid-year convention in DCF valuation, why is it used, and how does it materially change your implied Enterprise Value? Walk me through the math on a simple 5-year FCF stream of $100M/year discounted at 10% WACC under both year-end and mid-year conventions.

mid_year_convention

DCFProAI-Graded (Preview)

Your DCF uses a 5-year explicit forecast. Year-5 FCF is $200M, year-5 EBITDA is $400M, your WACC is 10%, your assumed perpetuity growth rate is 2.5%, and your peer-group median exit EV/EBITDA is 9.0x. Compute terminal value under both the Gordon Growth Model and the Exit Multiple method. What does the difference between the two tell you, and how would you reconcile if they diverge by 30%?

gordon_vs_exit_multiple

DCFProAI-Graded (Preview)

In your DCF, you used a terminal growth rate of 2.5%. An interviewer challenges you: "Why 2.5%? Defend that number."

terminal_growth_rate

DCFProAI-Graded (Preview)

Post-IFRS 16, the standard unlevered free cash flow formula (EBIT × (1−T) + D&A − CapEx − ΔNWC) overstates true cash generation for lease-heavy businesses. Walk me through the two acceptable approaches to handle leases in a post-IFRS-16 DCF, and why the EV bridge must be consistent with whichever choice you make.

leases_in_dcf

EV / EquityBeginnerAI-Graded (Preview)

What is Enterprise Value and how is it different from Equity Value?

ev_vs_equity

EV / EquityBeginnerAI-Graded (Preview)

When bridging from equity value to Enterprise Value, you have to add net debt. Beyond plain term loans and bonds, what other debt-like items belong in the EV bridge, and why?

ev_bridge_debt_like

EV / EquityIntermediateAI-Graded (Preview)

A company has a market capitalization of $500M, total debt of $200M, cash of $50M, preferred stock of $30M, and minority interest of $20M. Calculate its Enterprise Value and explain each component.

ev_calculation

EV / EquityIntermediateAI-Graded (Preview)

A parent owns 80% of a consolidated subsidiary. Walk me through how the 20% minority interest (non-controlling interest) flows through the parent's consolidated financials: where it appears on the balance sheet, what happens to it on the income statement, how to treat it when computing Enterprise Value from market capitalization, and how to treat it when calculating diluted EPS.

minority_interest

EV / EquityProAI-Graded (Preview)

A company has 100M basic shares outstanding at $50/share. It also has: (a) 5M options with a $40 strike that are in-the-money, (b) 2M unvested RSUs, (c) $200M of convertible bonds with a conversion price of $45. Walk me through diluted share count using the treasury stock method for the options, the standard treatment for the RSUs, and the if-converted method for the convertible bonds. What is the diluted share count, and where does the analyst often get this wrong?

diluted_shares

EV / EquityProAI-Graded (Preview)

An analyst presents a valuation using EV/Net Income as the primary multiple. What is wrong with this approach?

ev_multiples_mismatch

LBOBeginnerAI-Graded (Preview)

Walk me through the basic mechanics of an LBO from entry to exit.

lbo_mechanics_overview

LBOBeginnerAI-Graded (Preview)

Why does using more leverage increase the equity IRR in an LBO, all else equal?

leverage_returns_mechanics

LBOBeginnerAI-Graded (Preview)

What is a leveraged buyout, and why do private equity firms use them?

lbo_definition

LBOBeginnerAI-Graded (Preview)

What is a sources and uses table, and what does it tell you about an LBO?

sources_and_uses

LBOIntermediateAI-Graded (Preview)

What are the typical sources of debt financing in an LBO, and how do they differ in seniority, cost, and covenants?

lbo_debt_tranches

LBOIntermediateAI-Graded (Preview)

Walk me through a paper LBO: $100M EBITDA, 10x entry multiple, 60% debt, 5-year hold, EBITDA grows to $150M, exit at the same 10x multiple, $30M of annual debt paydown (treat this as already net of interest, CapEx, and any cash sweep, so you do not need to back out an interest rate). What is the equity IRR?

paper_lbo

LBOIntermediateAI-Graded (Preview)

A sponsor is choosing between two deals with identical EVs, EBITDA growth, and exit multiples. Deal A pays down $200M of debt over the hold; Deal B pays down $50M. How does this affect the equity IRR, and why?

debt_paydown_irr

LBOProAI-Graded (Preview)

Your LBO model assumes a 5% blended cost of debt. The interviewer asks: how would a 100bps increase in interest rates change your returns, and what mitigants would you propose?

interest_rate_sensitivity

LBOProAI-Graded (Preview)

You assumed 5x EBITDA of leverage at entry for your LBO. The MD challenges you: "Defend why 5x is right for THIS deal."

leverage_defense

LBOProAI-Graded (Preview)

Walk me through the impact of a dividend recapitalization on equity IRR, and explain when a sponsor would do one versus simply holding for an exit.

dividend_recap