William Blair & Company Interview Practice Test

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• How do you calculate Enterprise Value (EV)?
• If there are no comps available, which valuation method is typically used?
• How do the three financial statements interrelate in terms of flow of information?
• What does the material suggest about the use of multiples in valuation?
• Which sequence correctly lists the main sections of the Statement of Cash Flows?
• P/E ratio from EPS is calculated as which of the following?
• Where could depreciation appear on the income statement?
• In a DCF model aimed at valuing the enterprise value, which cash flow should be used?
• What does unlevered beta primarily measure?
• Which components are used in the Cost of Equity under CAPM?
• Why is IB interesting?
• Which item is NOT listed as part of William Blair's culture?
• What is the primary purpose of a three-statement model?
• How do you compute the cost of debt if bond information is available?
• Which statement best describes working capital in relation to liquidity?
• If cash collected is not recorded as revenue, where does it appear initially?
• What is your biggest weakness?
• Of the three main valuation methodologies, which statement is true?
• With stock price data available, what is the method to estimate beta?
• In the context of joining a program, which question would interviewers typically ask to gauge success in the role?
• Net debt is defined as which of the following?
• How is the risk-free rate typically determined?
• What is goodwill and how is it calculated?
• In an LBO, which statement about entry and exit multiples is true?
• In a comps-based valuation, which sequence of steps best describes how to use comparable companies to derive a valuation?
• If growth equals P/E, what PEG value should you expect approximately?
• In an LBO, which balance sheet item is typically added on the Liabilities & Equities side?
• Which of the following represents the general healthy guideline for EV/EBITDA as described?
• Deferred Revenue is recognized on the Income Statement when what occurs?
• How is Market Capitalization calculated?
• If you adjust DCF forecasts downwards and EV falls by 250m, what happens to Equity Value?
• How do you calculate the market value of equity (MVE)?
• What does minority interest mean?
• Which statement best describes the approach of transaction multiples valuation?
• What does 'foregone interest on cash' refer to in M&A analysis?
• Which items are considered current assets under working capital?
• Which statement best describes capital expenditure?
• What is the main distinction between a Leveraged Buyout (LBO) and a Discounted Cash Flow (DCF) model?
• What is the primary distinction between a discounted cash flow (DCF) analysis and a leveraged buyout (LBO) analysis?
• When would you prefer comps to DCF?
• Which of the following is NOT listed as a basic acquisition effect?
• Book value of a company is defined as what?
• Which of the following should you look at when choosing the perpetual growth rate?
• In an LBO model, what is typically assumed about principal repayments within the equity cash flows?
• In accretion/dilution analysis, when is a deal accretive?
• If a stock has a PEG ratio significantly greater than 1, what is a likely interpretation?
• Which items are considered debt-like and included in enterprise value?
• Which EV/EBITDA range is described as the typical range in the material?
• What earnings metric is used to define middle market firms according to analysts?
• What has been the trend for lithium prices?
• Which industry has a beta of 2+ according to the provided data?
• What is the appropriate numerator for a revenue multiple?
• If corporate taxes rise, what happens to EV/EBITDA and P/E ratios usually?
• Do we want higher or lower multiples such as EV/EBITDA, P/E, and PEG according to the material?
• Which statement is true about non-cash expenses and their impact on the cash flow statement?
• What is the final output of the beta calculation as described?
• Which company is pitched as a stock in the material?
• In a DCF, terminal value can be based on which methods?
• RoA measures which of the following?
• What is the formula for 'cost of cash' in accretion/dilution calculations?
• In the global market discussion, what factor is identified as contributing to recession concerns in Germany's manufacturing sector?
• Which valuation approach typically yields a lower valuation?
• Retained earnings are best described as which of the following?
• What is a key reason to prefer an LBO analysis in valuation scenarios?
• Fully diluted shares outstanding represent?
• Which market-cap level typically has the higher Cost of Equity, all else equal?
• Which statement best describes the recent LVMH acquisition of Tiffany & Co.?
• Which statistic is listed for William Blair's activity since January 2015?
• When would you not use a discounted cash flow (DCF) valuation?
• Which metric is not a common valuation multiple?
• Which multiple expresses enterprise value relative to sales?
• Why pursue a career in investment banking according to the material?
• Which statement best captures the idea of an engaging pitch book?
• What is identified as a key M&A driver in industry trends?
• In a perpetuity-growth DCF, the terminal value equals FCF5 × (1 + g) / (WACC − g).
• In an accretion/dilution analysis with all debt and cash considered, when is the deal dilutive?
• What does a PEG ratio below 1 imply about a company's valuation relative to its expected earnings growth?
• When asked to pick a market you understand well, which market was chosen?
• The four groups referenced for the WB framework include which of the following?
• After inventory increases by 10 and you later sell them for 20, what happens to the Income Statement?
• What describes the positive side of negative working capital?
• Which statement correctly describes which valuation metrics are capital structure neutral?
• When inventory increases, reducing cash, what is the impact on Cash Flow from Operations?
• Which statement illustrates being perceptive?
• Which set of valuation multiples is explicitly cited in the material as potentially used?
• What does the P/E ratio indicate?
• Why might two companies in the same sector with identical financial statements be priced differently?
• Which statement about PEG around 1 is consistent with the described relationship between growth and price?
• In the LBO balance sheet, on the assets side, what adjustment is made?
• What are the three sections of the cash flow statement?
• Which statement demonstrates resilience?
• Why do we subtract the change in net working capital to compute free cash flow from net income?
• What is the primary objective of a discounted cash flow (DCF) model?
• To estimate beta for a non-listed company, what is the standard approach?
• Why subtract cash when calculating Enterprise Value from Equity Value?
• What is the terminal value exit approach formula?
• Why is debt considered cheaper than equity?
• In industries with very large depreciation and heavy fixed assets, which metric is typically used?
• Which industry has a P/E ratio of 144 according to the data?
• Which acquisition method would a company typically prefer to use?
• Which item is a current liability?
• RoE measures which of the following?
• Which statement best describes cash-based accounting?
• A three-statement model typically includes which items?
• What does the income statement start with?
• Why can't you use EV/Earnings or Price/EBITDA as valuation metrics?
• Which statement about the exit multiples is true?
• Why is the Income Statement not affected by changes in Inventory?
• Which scenario makes revenue multiples more informative than EBITDA multiples?
• Why do companies pay a premium when acquiring another company, according to the material?
• What is the correct formula for levered beta?
• Which statement about debt holders is true?
• Which of the following is a commonly used valuation multiple listed alongside PEG in valuation discussions?
• Which statement correctly describes the calculation of closing cash on the balance sheet from the previous period?
• What is noted about the impact of coronavirus on stock markets?
• Which statement about enterprise value is true?
• In accretion/dilution, what is the cost of stock equal to?
• In a scenario where Company A buys Company B, resulting in merged sales of 300 while A's sales are 150 and B's are 100, what is a plausible explanation for the higher merged sales?
• In the absence of stock price data, which approach estimates beta?
• Which financial statement provides the clearest picture of how much cash a company is actually generating?
• In the EV-to-EQUITY bridge, net debt is defined as?
• The PEG ratio concept suggests that growth should equal which valuation metric, resulting in a PEG around 1?
• P/E depends on both interest and tax, which vary between countries. Which factor best explains this variance?
• Which statement describes an accretive merger?
• What P/E multiple was mentioned as around?
• Which attributes are cited as part of the firm's cultural fit?
• Which description best defines beta in finance?
• After increasing inventory by 10 and funding it with cash, what happens to Assets on the Balance Sheet?
• Which financial statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at a specific date?
• If the IRR is 15%, how much will the initial investment grow according to the given material?
• If EBITDA is negative, which statement about multiples is true?
• Which statement aligns with PEG reasoning described in the material?
• Which sequence correctly maps revenue to net income, as described in standard income statement flow?
• After a share repurchase, which of the following is true about ROA and ROE?
• When do we use a DCF instead of other valuation methods?
• What is a primary reason to use an LBO?
• Which formula represents unlevered free cash flow commonly used in discounted cash flow analysis?
• In the CAPM formula, which components determine the expected return?
• Which of the following is a valuation technique listed?
• Which aspect of William Blair is cited as a reason to join the firm?
• In the Ryanair stock pitch, which factors support its attractiveness?
• Which is a con cited for the lithium market?
• Which metric is preferred for comparing companies across different countries?
• Which method can be used to estimate Cost of Equity without using CAPM, according to the material does mention?
• Using an EBITDA of 850 and an EV/EBITDA multiple of 11.1x, what is the estimated enterprise value?
• What is the correct formula for unlevered beta?
• Which statement about the balance sheet after a share buyback is true?
• Which statement best captures the difference between dividends and share buybacks?
• Which approach is commonly used to model terminal growth in valuation?
• Which step is typically part of an M&A deal process?
• P/BV indicates which of the following?
• Which expression correctly defines Free Cash Flow (FCF)?
• What does unlevered profitability mean?
• In an LBO, what happens to Shareholders’ Equity on the balance sheet?
• If a company has negative historical cash flow, which valuation approach is most appropriate?
• Between two identical firms where one has debt and one does not, which is correct about WACC?
• What is the purpose of un-levering and then relevering beta?
• What is the company yield defined as?
• In an all-stock accretion/dilution scenario, accretion is more likely when:
• Which financial ratio is typically considered when deciding whether to issue debt?
• Investing Activities typically include which type of items?
• Which statement describes EV/EBITDA?
• Which of the following is a major line item on the Income Statement?
• Which of the following statements about earnings yield is true?
• Which statement best reflects the relationship between PEG ratio and future earnings expectations?
• Capex appears as a line item in which section of the cash flow statement?
• Which item is typically included in Net Cash Flow From Operating Activities?
• Which of the following is NOT listed as a strength?
• What does a positive working capital indicate for a company?
• As of June 2018, what was the average EV/EBITDA for the S&P 500?
• What is the purpose of sensitivity analysis in a financial model?
• Which is an assumption commonly used in constructing a DCF model?
• Which statement best describes FCFF and FCFE?
• Which item is included in current assets under working capital?
• In accretion/dilution, what is the formula for the 'cost of debt'?
• What aspect of Carlyle's M&A teaching is emphasized for the acquirer?
• Which criterion is typically assessed before deciding to issue debt?
• During an IPO, which metric is typically more informative about operating health?
• In valuation practice, when is a DCF model most justified?
• Which components are used to calculate the Weighted Average Cost of Capital (WACC)?
• If valuing equity using levered free cash flow, which discount rate should be used?
• Which scenario could lead to negative enterprise value?
• Why does depreciation affect cash balance even though it is a non-cash expense?
• Tell me about yourself
• What does the Money on Money Multiple (MoM) represent?
• Why is depreciation added back when calculating free cash flow from net income?
• Which statement describes a reason to prefer equity financing?
• In an LBO, floor valuation is typically lower because...
• Why do we multiply a stock's beta by the market risk premium?
• Which scenario describes gaining control of a subsidiary and using the acquisition method?
• Which item is NOT typically part of an LBO model process?
• Which statement about entry and exit multiples is true?
• In an all-stock merger, when is the deal likely accretive?
• Which statement best describes the use of P/E, EV/EBIT, and EV/EBITDA?
• Which is a pro cited for the lithium market?
• How is EBITDA margin defined?
• What does a positive working capital indicate in the cash flow from operations?
• Which term completes the CAPM formula for expected return?
• Which of the following describes the starting and ending points of an unlevered free cash flow statement?
• According to industry trends, why have M&A transactions not consistently added value?
• In consolidated financial statements, what does minority interest represent?
• Which expression defines levered free cash flow in the context of DCF?
• What does CAPM use to determine the Cost of Equity?
• Which element is cited as part of William Blair's standing and reputation?
• Which item is a major line item on the Balance Sheet?
• Which statement best captures the typical emphasis of a boutique investment bank?
• Why are Goodwill and Other Intangibles used on the assets side in an LBO balance sheet?
• Which statement best describes why both enterprise value and equity value are reported?
• What is the implied relationship between growth and P/E in the PEG framework?
• Which statement best describes the typical relationship between Equity Value and Shareholders' Equity in healthy companies?
• Which of the following is NOT listed as a major driver of M&A?
• Which measure, when subtracting capital expenditures, can be used to estimate unlevered free cash flow from the cash flow statement?
• Which of the following describes a typical financial model overview?
• How do you compute the cost of debt if there is no bond information?
• Which of the following statements is NOT listed as a reason for why one company might acquire another?
• Which item is typically reported under Financing Activities?
• Which scenario could lead to a negative enterprise value?
• Which equation represents the balance sheet relationship?
• Why are lower valuation multiples considered preferable in this context?
• Given a depreciation expense of 10 before tax and a 40% tax rate, which is the impact on Net Income and on Cash Flow from Operations?
• How many countries does William Blair operate in?
• What are the two components mentioned for terminal value in DCF modeling?
• Which metric best measures profitability relative to shareholder equity?
• Which statement best reflects the relationship between leveraged beta and industry risk as described?
• What is the general takeaway about discounting valuation multiples such as EV/EBITDA, P/E, and PEG in this material?
• If net income is 120 and dividends paid are 20, retained earnings increase by which amount?
• Where is capex reflected on the financial statements?
• In what scenario is the Dividend Discount Model most appropriate for estimating Cost of Equity?
• Two identical companies, which P/E would you prefer?
• Which is an example of a current asset?
• Which formula correctly derives EBITDA?
• Which of the following is not a standard valuation multiple?
• What did markets price in after the Federal Reserve cut rates twice in 2019?
• Which condition is described as rising globally?
• Which statement about lower valuation multiples is consistent with the material?
• Why do we consider both enterprise value and equity value in valuation?
• When evaluating a project with cash flows from multiple countries, which approach is commonly used to estimate the overall WACC?
• Capital expenditures affect the income statement primarily through which mechanism?
• What is the difference between Equity Value and Shareholders' Equity?
• What is the middle market definition?