Question

In: Finance

8. Which one is NOT a key financial characteristic to examine when screening for comparable companies?...

8. Which one is NOT a key financial characteristic to examine when screening for comparable companies?

a. Customers

b. Growth profile

c. Profitability

d. Industry

9. In Borland-Ashton acquisition, Ashton has lower multiples than its comparable companies. Based on the acquisition performance, which one of the following is true?

a. Ashton is a high quality & undervalued firm, which represents a buying opportunity

b. Ashton is a high quality & overvalued firm, which represents a selling opportunity

c. Ashton might have intrinsic shortcomings that justify a lower multiple

d. None of the above

10. A company with no debt in its capital structure would have a weighted average cost of capital equal to its _______.

a. Cost of equity

b. After-tax cost of debt

c. Cost of debt

d. Risk-free rate

11. Which of the following is NOT a key driver of a company’s projected FCF?

a. EBIT margins

b. Sales growth

c. Capex

d. Discount rate

Solutions

Expert Solution

Which one is NOT a key financial characteristic to examine when screening for comparable companies?

a. Customers

b. Growth profile

c. Profitability

d. Industry

(Answer: a. Customers )

In Borland-Ashton acquisition, Ashton has lower multiples than its comparable companies. Based on the acquisition performance, which one of the following is true?

a. Ashton is a high quality & undervalued firm, which represents a buying opportunity

b. Ashton is a high quality & overvalued firm, which represents a selling opportunity

c. Ashton might have intrinsic shortcomings that justify a lower multiple

d. None of the above

(Answer : c. Ashton might have intrinsic shortcomings that justify a lower multiple )

Which of the following is NOT a key driver of a company’s projected FCF?

a. EBIT margins

b. Sales growth

c. Capex

d. Discount rate

(Answer d. Discount rate)

jeff jeffy answered 1 year ago

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