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In this video on Valuation Interview Questions and Answers, here we have divided questions into basic, application and advanced questions on valuation which will help you in valuation interview.
𝐁𝐚𝐬𝐢𝐜𝐬 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬
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Let’s look at these basic evaluation questions with the answers.
#1 – What is Free Cash Flow to Firm?
The excess cash generated above and beyond these expenses is free cash flow to the firm. Free cash flow to the company goes to debt holders and holders of equity.
#2 – What is Free Cash Flow to Equity?
FCFE measures how much “cash” a company can give back to its shareholders and is calculated after tax, capital expenditure, and debt cash flows are taken care of.
#3 – What is Dividend Discount Model?
Dividend Discount Model is based on the understanding that the present value of all its future dividends is the fair value of the stock.
#4 – What are the most common multiples used in valuation?
Here are few common multiples of valuations that are often used in valuation –
EV to EBIT
Price to Cash Flow
Enterprise Value to Sales
EV to EBITDA
PEG Ratio
Price to Book Value
PE Ratio
#5 – What is the difference between trailing PE and forward PE?
Trailing PE Ratio uses the Historical EPS while the Forecast EPS is used by Forward PE Ratio
To know more about 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 𝐈𝐧𝐭𝐞𝐫𝐯𝐢𝐞𝐰 𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬 𝐚𝐧𝐝 𝐀𝐧𝐬𝐰𝐞𝐫𝐬, you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:- https://www.wallstreetmojo.com/valuation-interview-questions/
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