1 Fill in the highlighted cells in the table. Answer (must exactly match option in choice set, so copy & paste from group of possibilities is suggested) Question 2 3 Is the following statement true or false? The quality of a firm's management is relevant to valuing a firm What term, popularized by Warren Buffet, refers to a business' ability to maintain competitive advantages over its competitors in order to 4 protect its long-term profits and market share from competing firms? 5 Among analysts, managers, & lenders, which, if any, often has an incentive to overvalue firms? Which term is used to describe approaches that estimate the value of a firm (or its equity) as the present value of expected cash flows? 6 Which term is used to describe approaches that estimate the value of a firm (or its equity) by identifying the relationship between market 7 value and a financial measure? 8 Is the following statement true or false? DCF analysis involves intrinsic valuation 9 Is the following statement true or false? Market comps analysis involves intrinsic valuation Firms A, B, & Chave all just published buy recommendations of Firm X. Firm A's report has poorly done analysis and no discussion of why the market is wrong in its evaluation of Firm X. Firm B's report has very well done analysis and no discussion of why the market is wrong in its evaluation of Firm X. Firm C's report has very well done analysis and a discussion of why the market is wrong in its evaluation of Firm X. Which 10 firm or firms have reports that meet the minimum standards for being persuasive? 11 Is the following statement true or false? Enterprise value is based on all assets and all liabilities. Which type of financial figures are easier to obtain and more difficult to manipulate in market comps analysis? 12 Which 2 of the 5 most common multiples involve measures that best reflect operating activities and performance? 13 Which of the 5 most common multiples can be used to value the greatest number of firms? 14 Which of the 5 most common multiples is intuitively appealing, because it involves a measure that reflects the bottom line? 15 Is the following statement true or false? EV/EBITDA is a more popular multiple than EV/EBIT, and EV/EBITDA is always a superior multiple to 16 EV/EBIT Which of the 5 most common multiples can be used to value many firms because the book value assets often exceeds the book value of 17 liabilities? Which of the 5 most common multiples is especially useful for valuing relatively young firms? 18 Which 2 of the 5 most common multiples are most wideky used by analysts for valuations? 19 20 Is the following statement true or false? Market comps valuation is a relatively difficult methodology to use? Under what conditions involving risk, growth, and management quality for a firm, should a peer multiple be adjusted down to get a more 21 appropriate pricing multiple for a particular firm? One of the following is the answer to every question. One or more of these possibilities may be the correct answer to several of the questions. One or more may be the answer to none of the questions. Core measures Analysts, managers, and lenders EV/EBITDA Firm A, but not Firm B or Firm C Core valuation Analysts and managers, but not lenders EV/EBIT Firm B, but not Firm A or Firm C Discount measures Analysts and lenders, but not managers EV/sales Firm C, but not Firm A or Firm B Economic moat Managers and lenders, but not analysts P/E Firm A and Firm B, but not Firm C Enduring source Analysts, but not managers or lenders P/B Firm A and Firm C, but not Firm B Forecast measures Intrinsic valuation Managers, but not analysts or lenders Lenders, but not analysts or managers Firm B and Firm C, but not Firm A Firm A, Firm B, and Firm C EV/EBITDA and EV/EBIT Protective advantage Not lenders or analysts or managers EV/EBITDA and EV/sales Not Firm A or Firm B or Firm C Pure valuation EV/EBITDA and P/E Relative valuation Firm A, but not Firm B or Firm C EV/EBITDA and P/B Traditional measures Firm B, but not Firm A or Firm C EV/EBIT and EV/sales Trailing measures Firm C, but not Firm A or Firm B EV/EBIT and P/E Warren Plus Factor Firm A and Firm B, but not Firm C EV/EBIT and P/B More risk, higher growth, and better management More risk, higher growth, and worse management More risk, lower growth, and better management More risk, lower growth, and worse management Less risk, higher growth, and better management Less risk, higher growth, and worse management Less risk, lower growth, and better management Less risk, lower growth, and worse management Wedge profit generator Firm A and Firm C, but not Firm B EV/sales and P/E Firm B and Firm C, but not Firm A EV/sales and P/B TRUE Firm A, Firm B, and Firm C P/E & P/B FALSE Not Firm A or Firm B or Firm C 1 Fill in the highlighted cells in the table. Answer (must exactly match option in choice set, so copy & paste from group of possibilities is suggested) Question 2 3 Is the following statement true or false? The quality of a firm's management is relevant to valuing a firm What term, popularized by Warren Buffet, refers to a business' ability to maintain competitive advantages over its competitors in order to 4 protect its long-term profits and market share from competing firms? 5 Among analysts, managers, & lenders, which, if any, often has an incentive to overvalue firms? Which term is used to describe approaches that estimate the value of a firm (or its equity) as the present value of expected cash flows? 6 Which term is used to describe approaches that estimate the value of a firm (or its equity) by identifying the relationship between market 7 value and a financial measure? 8 Is the following statement true or false? DCF analysis involves intrinsic valuation 9 Is the following statement true or false? Market comps analysis involves intrinsic valuation Firms A, B, & Chave all just published buy recommendations of Firm X. Firm A's report has poorly done analysis and no discussion of why the market is wrong in its evaluation of Firm X. Firm B's report has very well done analysis and no discussion of why the market is wrong in its evaluation of Firm X. Firm C's report has very well done analysis and a discussion of why the market is wrong in its evaluation of Firm X. Which 10 firm or firms have reports that meet the minimum standards for being persuasive? 11 Is the following statement true or false? Enterprise value is based on all assets and all liabilities. Which type of financial figures are easier to obtain and more difficult to manipulate in market comps analysis? 12 Which 2 of the 5 most common multiples involve measures that best reflect operating activities and performance? 13 Which of the 5 most common multiples can be used to value the greatest number of firms? 14 Which of the 5 most common multiples is intuitively appealing, because it involves a measure that reflects the bottom line? 15 Is the following statement true or false? EV/EBITDA is a more popular multiple than EV/EBIT, and EV/EBITDA is always a superior multiple to 16 EV/EBIT Which of the 5 most common multiples can be used to value many firms because the book value assets often exceeds the book value of 17 liabilities? Which of the 5 most common multiples is especially useful for valuing relatively young firms? 18 Which 2 of the 5 most common multiples are most wideky used by analysts for valuations? 19 20 Is the following statement true or false? Market comps valuation is a relatively difficult methodology to use? Under what conditions involving risk, growth, and management quality for a firm, should a peer multiple be adjusted down to get a more 21 appropriate pricing multiple for a particular firm? One of the following is the answer to every question. One or more of these possibilities may be the correct answer to several of the questions. One or more may be the answer to none of the questions. Core measures Analysts, managers, and lenders EV/EBITDA Firm A, but not Firm B or Firm C Core valuation Analysts and managers, but not lenders EV/EBIT Firm B, but not Firm A or Firm C Discount measures Analysts and lenders, but not managers EV/sales Firm C, but not Firm A or Firm B Economic moat Managers and lenders, but not analysts P/E Firm A and Firm B, but not Firm C Enduring source Analysts, but not managers or lenders P/B Firm A and Firm C, but not Firm B Forecast measures Intrinsic valuation Managers, but not analysts or lenders Lenders, but not analysts or managers Firm B and Firm C, but not Firm A Firm A, Firm B, and Firm C EV/EBITDA and EV/EBIT Protective advantage Not lenders or analysts or managers EV/EBITDA and EV/sales Not Firm A or Firm B or Firm C Pure valuation EV/EBITDA and P/E Relative valuation Firm A, but not Firm B or Firm C EV/EBITDA and P/B Traditional measures Firm B, but not Firm A or Firm C EV/EBIT and EV/sales Trailing measures Firm C, but not Firm A or Firm B EV/EBIT and P/E Warren Plus Factor Firm A and Firm B, but not Firm C EV/EBIT and P/B More risk, higher growth, and better management More risk, higher growth, and worse management More risk, lower growth, and better management More risk, lower growth, and worse management Less risk, higher growth, and better management Less risk, higher growth, and worse management Less risk, lower growth, and better management Less risk, lower growth, and worse management Wedge profit generator Firm A and Firm C, but not Firm B EV/sales and P/E Firm B and Firm C, but not Firm A EV/sales and P/B TRUE Firm A, Firm B, and Firm C P/E & P/B FALSE Not Firm A or Firm B or Firm C