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Banking and Credit Analysis

Banking and Credit Analysis Quiz

Test your knowledge of banking and credit analysis with our interactive quiz! Dive into key financial metrics, calculations, and concepts that are essential for understanding the world of finance.

Calculate EBITDA and Free Cash Flow
Determine WACC and understand its implications
Evaluate cash flows and terminal values
Assess compliance with financial ratios

8 Questions2 MinutesCreated by CalculatingEagle237

1. Using the information below, calculate EBITDA and Free Cash Flow.

Revenues $1,000,000 Tax Rate 25%

Capital Expenditures $125,000 Gross Margin 31%

Operating Margin 17% Depreciation $100,000

Interest Expense $15,000

Change in NWC $30,000

A. EBITDA $295,000; FCF $72,500

B. EBITDA $270,000; FCF $72,500

C. EBITDA $295,000; FCF $57,500

D. EBITDA $270,000; FCF $87,500

2. Using the information below, calculate WACC.

Target Capital Structure: 35% Debt, 65% equity

Revenues $1,000,000

Cost of Debt 5%

Tax Rate 25%

30 yr Govt YTM: 3.0%

Operating Margin 14%

MRP 6.8%

Net Income $40,000

A. 8.125%

B. 9.343%

C. 8.784%

D. 7.637%

3. What is the Present Value of the cash flows below using a WACC of 7%.

Year 1: 100

Year 2: 110

Year 3: 120
Year 4: 130

A. 386.66

B. 402.31

C. 366.86

D. 418.24

4. Using the information below, calculate the present value of the Terminal Value using the Multiples Method.

Yr 5 Revenues $3,000,000

Yr 5 Free Cash Flow $421,500

Depreciation $150,000

WACC 8.7%

LT industry growth 2%

Comps EBITDA multiple 11x

Operating Margin 14%

3,751,440.26

2,350,726.45

2,879,698. 23

4,131,523.46

5. Using the information below, calculate the present value of the Terminal Value using the Gordon Growth Method.

Yr 5 Revenues $3,000,000

Yr 5 Free Cash Flow $421,500

Depreciation $150,000

WACC 8.7%

LT industry growth 2%

Comps EBITDA multiple 11x

Operating Margin 14%

3,900,451.54

4,228,298.41

2,560,231.36

3,032,456.90

6. Use the information below to determine the Minimum Current Ratio of 2.0x is in complaince.

Cash 25 A/P 70 Debt Service 35

A/R 120 Accruals 50 Cash Taxes 34

Inventories 100 CMLTD 25 Interest Expense 5

Prepaids 10 LTD 140 Depreciation 16

PP&E 113 Equity 110 EBIT 140

Intangibles 27 Revenues 500

1.76, in compliance

1.76, not in compliance

2.05, not in compliance

2.05, in compliance

7. Use the information below to determine if the Maximum Debt/Equity of 1.0x is in compliance.

Cash 25 A/P 70 Debt Service 35

A/R 120 Accruals 50 Cash Taxes 34

Inventories 100 CMLTD 25 Interest Expense 5

Prepaids 10 LTD 140 Depreciation 16

PP&E 113 Equity 110 EBIT 140

Intangibles 27 Revenues 500

2.0, in compliance

1.5, not in compliance

1.5, in compliance

2.0, not in compliance

8. Use the information below to determine if the Minimum DSCR of 1.5x.

Cash 25 A/P 70 Debt Service 35

A/R 120 Accruals 50 Cash Taxes 34

Inventories 100 CMLTD 25 Interest Expense 5

Prepaids 10 LTD 140 Depreciation 16

PP&E 113 Equity 110 EBIT 140

Intangibles 27 Revenues 500

4.10, in compliance

3.49, not in compliance

3.49, in complaince

4.10, not in compliance

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