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The ideas behind the questions. Read the concept, then go practice it.
Accounting
- Article7 minEBITDA Is Perfectly Imperfect
Why EBITDA is everywhere: how to calculate it, what makes it so comparable, and where it misleads.
- Article5 minWhy Is an Increase in Working Capital a Cash Outflow?
The sign convention, why payables run the other way, and how a company can grow its profits and still run out of cash.
Valuation
- Guide12 minA Guide to the DCF
The full mechanics of a DCF: forecasting free cash flow, choosing a terminal value, and discounting.
- Guide10 minA Guide to Comps and Precedents
How relative valuation works in practice: picking the right comps and precedents, scrubbing the data, and the control premium.
- Article7 minWhy Do You Subtract Cash From Enterprise Value?
The real reason cash comes out, how much of it actually should, and why restricted cash usually stays in.
- Article5 minWhat Happens to WACC as You Add More Debt?
The weighting effect is only a third of the answer: why the cost of equity rises with leverage, why the tax shield is what makes debt cheap, and where the curve turns back up.
LBO
- Guide5 minA Guide to the LBO
The three levers of LBO returns, what makes a good LBO candidate, and how sponsors measure MOIC and IRR.
- Article5 minHow Do Dividend Recaps Affect IRR and MOIC?
Why a recap raises IRR and lowers MOIC, four worked scenarios, and the interest rate at which the math stops working.
- Article4 minWhy Management Rollover Doesn't Impact Sponsor IRR
Why a rollover leaves sponsor MOIC and IRR untouched at any size, the three cases where it doesn't, and what rollover is actually for.