Dialnet Communications Interview Questions and Answers

FCFF, FCFE, DCF, and Enterprise Value are key financial metrics used in valuation. Growth and Maintenance Capex are important factors in calculating these metrics.

• FCFF (Free Cash Flow to Firm) is the cash flow available to all providers of capital, calculated as Operating Cash Flow - Capital Expenditures + Interest Expense * (1 - Tax Rate)

• FCFE (Free Cash Flow to Equity) is the cash flow available to equity investors, calculated as Net Income + Depreciation & Amortization - Ch...read more

Working capital is used for day-to-day operations and is sourced from current assets. Enterprise value for private companies is calculated using various methods.

• Uses of working capital include funding daily operations, managing inventory, and covering short-term liabilities.

• Sources of working capital include cash, accounts receivable, and short-term investments.

• Enterprise value for private companies can be calculated using methods such as discounted cash flow, comparable comp...read more

EBITDA is a financial metric used to evaluate a company's operating performance by excluding non-operating expenses.

• EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.

• It provides a clearer picture of a company's profitability from its core operations.

• EBITDA is used as an alternative to net income because it excludes non-operating expenses, which can vary widely between companies.

• Investors and analysts use EBITDA to compare the operating performa...read more

Taking after tax EBIT / EBIT *(1-T) in FCFF calculation adjusts for taxes and interest expenses.

• FCFF (Free Cash Flow to Firm) is calculated before interest and taxes, so adjusting for taxes with after tax EBIT / EBIT *(1-T) accounts for the tax shield provided by interest expenses.

• FCFE (Free Cash Flow to Equity) is calculated after interest and taxes, so no adjustment is needed for taxes in the calculation.

• By using after tax EBIT / EBIT *(1-T) in FCFF calculation, we are esse...read more

Depreciation affects all 3 financial statements by reducing net income, increasing expenses, and decreasing assets' value.

• Reduces net income on the income statement

• Increases expenses on the income statement

• Decreases the value of assets on the balance sheet

• Impacts cash flow from operations on the cash flow statement

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance.

• EBITDA is calculated by adding back interest, taxes, depreciation, and amortization to net income.

• It is used to analyze and compare profitability between companies, as it excludes non-operating expenses.

• EBITDA helps investors and analysts assess a company's ability to generate cash flow from its operations.

• A higher EBITDA indicates better ope...read more