Which of the following is incorrect?
Question 30 options:
| A) | DCF is also referred to as the "perpetuity" or intrinsic model. | |
| B) | The two stage framework for valuation is derived from the fundamental analysis of the company's cash flow generation potential. | |
| C) | Multiples are also referred to as "Comps" or relative valuation models. | |
| D) | For the model results to be correct, both the DCF and the Multiples results must be equal. | |
Which of the following statements is false when discussing valuation methodology?
Question 32 options:
| A) | Terminal values can be determined using DCF or Exit Multiples | |
| B) | The cost of equity requires data on betas, market equity risk premiums and the risk free rate of return. | |
| C) | Because the terminal value is a long-term projection, it has minimal impact on the final valuation of the firm. | |
| D) | Unlevered free cash flows are annual cash flows freely available to all providers of capital in the business, after accounting for all necessary reinvestments. | |
How does net income differ from operating profit?
Question 37 options:
| A) | Operating profit includes interest expense and net income does not. | |
| B) | The difference is the amount of tax expense. | |
| C) | Net income represents the firm's profit after consideration of all revenue and expense reported for an accounting period, whereas operating profit only considers sales revenue and cost of goods sold. | |
| D) | Operating profit is calculated before interest expense, other income or expenses, and taxes, whereas net income includes all of those items. | |
Which of the following produces an incorrect observation?
Question 42 options:
| A) | A higher NOPAT, will typically result in a higher the return on invested capital. | |
| B) | The tax shield for NOPAT calculations is based on non-operating items from the income statement. | |
| C) | The tax shield for NOPAT calculations is subtracted from the total tax expense to determine the tax on operating results. | |
| D) | All of the answers are correct. | |
| E) | The operating tax is subtracted from operating income to determine NOPAT. | |