Cians Analytics Senior Analyst Interview Questions, Process, and Tips

WACC stands for Weighted Average Cost of Capital. It is the average cost of all the capital used by a company.

• WACC is used to determine the minimum return a company must earn on its investments to satisfy its investors.

• It is calculated by taking the weighted average of the cost of debt and the cost of equity.

• The formula for WACC is: WACC = (E/V x Re) + ((D/V x Rd) x (1 - Tc)), where E is the market value of the company...read more

The 3 financial statements are linked through the flow of information and transactions between them.

• The income statement shows revenue and expenses for a period of time, which affects the retained earnings on the balance sheet.

• The balance sheet shows assets, liabilities, and equity at a specific point in time, which affects the cash flow statement.

• The cash flow statement shows the inflow and outflow of cash during a pe...read more

Trading comps and transaction comps are valuation methods used in investment banking.

• Trading comps involves comparing a company's financial metrics to those of its peers in the same industry.

• Transaction comps involves analyzing the financial metrics of companies that have recently been acquired or sold.

• Both methods are used to determine the value of a company in a potential merger or acquisition.

• Trading comps are based...read more

Enterprise value is the total value of a company, including debt and equity.

• EV is calculated by adding market capitalization, debt, and minority interest, and then subtracting cash and cash equivalents.

• It represents the amount of money required to acquire the entire business.

• EV is a more comprehensive measure of a company's value than market capitalization alone.

• EV can be used to compare companies with different capita...read more

Minority interest refers to the ownership of less than 50% of a company's shares by an investor or group of investors.

• It is also known as non-controlling interest.

• The minority interest shareholders have limited control over the company's operations.

• Their share of profits is proportionate to their ownership percentage.

• Minority interest is reported on the balance sheet as a liability.

• Example: If Company A owns 80% of Com...read more

The treasury stock method is used to calculate the potential dilution of stock options and warrants. It assumes that the proceeds from the exercise of options and warrants are used to buy back shares at the average market price.

• TSM calculates the dilutive effect of stock options and warrants

• It assumes that the proceeds from the exercise of options and warrants are used to buy back shares at the average market price

• The ...read more

Adj. EBITDA is calculated by adding back non-recurring expenses to EBITDA. Non-recurring items include one-time expenses or gains.

• Adj. EBITDA = EBITDA + non-recurring expenses

• Non-recurring items include one-time expenses or gains such as restructuring costs, legal settlements, or gains from asset sales

• Non-recurring items are typically disclosed in the footnotes of financial statements