Investment Banking Intern Interview Questions and Answers

To determine if a company can take on additional debt, several factors need to be considered.

• Analyze the company's current debt-to-equity ratio

• Evaluate the company's cash flow and ability to make interest payments

• Assess the company's credit rating and borrowing capacity

• Consider the company's industry and economic conditions

• Review the company's financial statements and projections

• Compare the company's debt levels to its peers

• Factor in any upcoming capital expenditures or acqui...read more

Beta is a measure of a stock's volatility in relation to the overall market. It is used to assess risk and determine potential returns.

• Beta measures the sensitivity of a stock's price movement to changes in the market.

• A beta of 1 indicates that the stock tends to move in line with the market.

• A beta greater than 1 suggests the stock is more volatile than the market.

• A beta less than 1 indicates the stock is less volatile than the market.

• Investors use beta to assess the risk ass...read more

There are several ways to value a company, including discounted cash flow, comparable company analysis, and precedent transactions.

• Discounted cash flow (DCF) analysis

• Comparable company analysis (CCA)

• Precedent transactions analysis

• Asset-based valuation

• Earnings multiples

• Industry-specific valuation methods

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

• EBITDA is calculated by adding a company's earnings before interest, taxes, depreciation, and amortization.

• It is used to evaluate a company's financial health and operating performance.

• EBITDA is often used by investors and analysts to compare companies in the same industry.

• It is also used in mergers and acquisitions to determine a company's v...read more

A financial model is a tool used to forecast a company's future financial performance based on historical data and assumptions.

• Financial models are used to analyze a company's financial statements and make projections for future performance.

• They typically include income statements, balance sheets, and cash flow statements.

• Assumptions about factors such as revenue growth, expenses, and capital expenditures are key inputs into the model.

• Sensitivity analysis is often performed t...read more