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
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
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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