Useful Excel Shortcuts

Ctrl + spacebar - select column

Shift + spacebar - select row
Ctrl + Shift + + - insert row / column (after using one of the previous two)
Ctrl + mousewheel – zoom in/out
F4 - repeat previous action
F4 – anchor cells
F5 – jump to cell
Shift + { - track backward (Ctrl + Shift + { on capIQ)
Shift + } – track forward (Ctrl + Shift + } on capIQ)
Shift + F3 - cycle through capitalization
Shift + F2 - insert / view comment
Shift + F8 - select separate sections
Shift + F10 - insert cut cells and shift (after doing Ctrl + x)
Ctrl + F4 - close file
Ctrl + F3 – name cells  Alt + N for new name (can’t put spaces, use underscore,
scope: workbook)  type =Tax_Rate (can use tab to quickly get to recommended
name)
F5, Alt + S + O + X – highlight constants (do text to find hardcodes)
F5, Alt + S + F + X – highlight formulas
***To find links to other sheets, do Ctrl + F for !, be careful bc some are formulas
Alt + Enter - New line in cell (not recommended, harder to edit)
Ctrl + Arrow Keys - skip words
Ctrl + Shift + Arrows - highlight words
Del - delete cell contents
Alt + T + O - options
Enter – accept and move in default direction (down)
Ctrl + Enter - accept and stay there
Tab - accept and move right
Shift + Tab - accept and move left
Alt + H+O+I - automatically resize column (after pressing Ctrl + spacebar)
Alt + H + 6 - indent (or Ctrl + Alt + Tab)
Ctrl + ~ - show all formulas
F9 – refresh/calculate all sheets
Shift + F9 – refresh / calculate current sheet
Alt + E + S – paste special (or Ctrl + Alt + V)  T=formats, V=values, F=formulas
‘ instead of = - show formula without evaluating
Alt + Tab – switch windows
Ctrl + Tab – switch workbook
F12 – save as
Shift + F11 – new worksheet
Shift + Ctrl + PgUp/PgDn – select multiple worksheets
Alt + H + D + S – delete worksheet
Alt + H + O + M – move/copy worksheet
Alt + H + O + T – Color worksheet tab
Alt + H + O + R - rename sheet
Alt + D + T – data table (sensitivities)
Alt + H + O + U + S – Hide worksheet
Alt + H + O + U + H – Unhide worksheet
Alt + H + FP – format painter
Ctrl + Shift + & - add border
Ctrl + Shift + - - remove border
Alt + E + S – paste special  Ctrl + Alt + V in newer excel
Alt + H + B – add border
Alt + H + N – change formats
***Center across a selection - Ctrl + 1
Alt + M + P – trace precedents
Alt + M + A + A – erase precedents
=Date – can join day, month, year to make date
=Month – returns month from date
=Day – returns day from date
=Year – returns year from date
=DATEVALUE – converts text to date
=Networkdays (# of working days between two dates)
=EOMonth (last day of month after # of months)  good for models, like 10K filing (3
months)
Ctrl + Shift + ; - insert current time
Ctrl + ; - insert current date

Check how to spell check***

LARGE FUNCTION?

1. Rank EV/EBITDA, P/E, and EV/EBIT for the "general" company.

2. How would you value NOLs?
3. You sell a subscription that is $12 per year, delivered monthly.
3a. Walk me through the 3 statements right after you sell the subscription (the $12 is delivered at
the beginning of the year all at once).
3b. Walk me through the 3 statements after one month.
4. What kind of company would have the same EBITDA and Net Income.
5. A company acquires $200 worth of PP&E.
5a. Walk me through the 3 statements for each of the following variations: 1) 100% cash
purchase; 2) Operating Lease; 3) Capital Lease
5b. Rank each of the aforementioned variations in terms of EBITDA, Net Income and EBIT.
6. Why might two companies with the same financial profile have
different EV/EBITDA multiples?
7. What's the relationship between the D/E ratio and WACC?
7a. What's the relationship between the D/E ratio and the value of a company?
8. How does an increase in the tax rate affect the value of a company?
9. A company has an EV of $100, no cash and $400 of debt. How is this possible?
10. How much would you pay for an asset that pays you $100 a year, guaranteed?
11a. There is a company that manufactures pots from steel. The company purchases $500 of
manufacturing equipment and $500 of steel financed by $1000 of debt. The company has a 10%
cost of debt with no debt amortization and depreciates its manufacturing equipment using
straight line depreciation over 5 years with no residual value. Walk me through the 3 statements
right after the purchase.
11b. Say the company sells $900 of pots and uses $300 of its steel. It has $200 in SG&A expense
and has a 40% tax rate. Walk me through the 3 statements at the end of Year 1.
11c. Say the company switches to FIFO accounting from LIFO and that the price of steel is
declining. What happens to the company's free cash flows and what happens to the value of the
company?
12. A company has a $100 market capitalization. There are 100 options with strike price of $5.
Current share price is $10. What's the fully diluted market capitalization?
13. If you buy a company trading at 20x P/E and the deal is financed 100% with debt at 5%
interest, is the deal accretive or dilutive?
14. Does mid-year convention result in a higher or lower valuation?
15. What are some pros/cons of a strategic and financial acquirer from the perspective of the
target company?

I'll bite. Feel free to correct me if I'm wrong on any of these...

1. From highest to lowest: P/E, EV/EBIT, EV/EBITDA (generally, obviously depends on

amount of debt of the company and differences between EBITDA and net income)
2. This one is iffy. I've heard 30 different ways to value an NOL. Generally you value it
separately from the operations of the firm. So you would look at your projections, and offset
taxable income from your projections with the NOL balance. Do this until the NOL has run
out, and then discount the tax savings to PV. Again, discount rate differs depending on who
you ask, but you could argue Cost of Equity as the discount rate since the NOL savings offset
taxable income, which is after interest in the payment priority (i.e. tax savings flow directly
to equity holders).
3.a. No change to the income statement; Cash goes up 12 on the balance sheet, Liabilities go up 12
from unearned revenue; Cash flow statement increases CFO by 12 from the increase in NWC (the
liability increase from the unearned revenue)

3.b. Revenue increases by 1 (I'm just going to ignore COGS since no detail was given), Net Income
increases by .6 (assuming 40% tax rate) on Income Statement; Balance Sheet: Cash decreases by .4
from the taxes you paid (Assets down .4), unearned revenue liability decreases by 1 (Liabilities down
1), Net Income increases by .6 (Equity up .6); Cash Flow: Net Income up .6, NWC change down 1
(the decrease in the unearned revenue liability), so CFO down .4
 4. This is a weird question. I suppose a company without debt (so no interest), no owned PPE
(so no D&A), and has no taxable income. So some type of services company (i.e.
consulting?) that isn't doing well so their EBT is 0?
5.a.1 No change to income statement; PPE increases 200, cash decreases 200, so assets net to no
change; Cash Flow Statement: CFI decreases by 200
5.a.2 No change to income statement initially (although you will record rent expense during the lease
period and the associated tax savings); No change to B/S initially (but will decrease cash as payments
are made and change Equity as NI decreases); No change to CFS initially, but CFO will decrease as
payments are made
5.a.3 No change initially to I/S or CFS; Balance sheet Asset will increase by PV of the lease
payments, Liability will increase by the PV of the lease payments. As payments are made, you record
depreciation and interest on the I/S, decrease the asset by depreciation, and decrease the liability as
payments are made. CFS changes for CFO as interest payments are made (CFO), add back
depreciation (CFO since non-cash).
5.b. EBITDA: Cash, Capital Lease, Operating Lease
Net Income: Cash, Capital Lease, Operating Lease (In the early years, interest is higher, so Operating
Lease and Capital Lease should be switched, but in the out years it looks like this)
EBIT: Cash, Capital Lease, Operating Lease

6. Different growth profiles, one uses operating vs. capital lease, one is an industry leader and
deserves higher multiple
7. As D/E increases, generally WACC will decrease since debt is cheaper than equity
7.a. As D/E increases and WACC decreases, value should increase
*NOTE: If D/E gets too high, then debt becomes expensive/risky, so the above answers only
hold true to a point.
8. Generally decreases value, since the increased tax payments means less unlevered free cash
flow. However, this can be mitigated by a lower WACC, but generally speaking value should
decrease as a whole.
9. Company is balance sheet insolvent. Debt will likely trade at a huge discount--company is
distressed (theoretically speaking, equity is negative $300m, but equity can never trade lower
than zero)
10. Formula for a perpetuity is 100/discount rate. So assuming a current interest rate of 1%, I
would pay $10,000. Theoretically I could take $10,000 and invest it at 1% interest to get
 $100 per year.
*I'd also note that this assumes I live forever, but in reality I wouldn't pay 10,000 since I
won't get cash flow infinitely
11.a. No change to I/S. CFS: CFI down 1,000, CFF up 1,000; B/S: Assets up 1,000, Liabilities up
1,000
11.b. Rev up $900, $300 of COGS, $200 of SG&A, $100 of dep. expense, $100 of interest exp. So
$200 of taxable income, but then $80 of tax (40% tax rate), so net income increases by $120. CFS:
NI up $120, add back $100 of depreciation, so CFO up $220 and net cash up $220. B/S: Cash up
220, PPE up 900 (1,000 less 100 of dep.), Liabilities up $1,000, Equity up 120 (net income).
11.c. COGS decreases, so net income increases. That said, I think value will actually decrease, since
any increase in Free Cash Flow from lower COGS is tax affected, whereas the corresponding change
in NWC (from inventory changes) will change by the same amount, but not tax affected. So therefore
free cash flow will actually decrease, as will value. I could be wrong here.

12. Using treasury stock method, a company will have $500 from the exercised options ($5 per
share strike price x 100 options). They can buy back 50 shares ($500 / $10 per share current
price). So 50 new shares issued at a current price of $10 per share means $500 of additional
market cap. So $600
13. Accretive. If you reverse the P/E, you get a cost of earnings (earnings yield) of 1/20 or 5%.
This is the cost of debt, but you need to take into account the tax shield on debt, which at a
40% tax rate means an effective 3% cost of debt. So therefore you're effectively paying 3%
for earnings generating 5%.
14. Higher valuation, since you now assume cash flows come 6 months into the year instead of
12 (so cash flows coming sooner means less discounting).
15. Pros of Strategic: Synergies and ability to pay in stock, so upside potential for target, can
generally pay more (due to synergies), operational expertise in sector
Cons of Strategic: Potential regulatory approval (FTC), may only want to pay in stock if its
overvalued
Pros of Financial: Higher transaction certainty (financial buyers execute many more transaction),
maybe general operational expertise (running businesses in general), will pay in cash
Cons of Financial: Little to no upside for target (other than maybe a MIP), might fire management,
generally pay less than strategic.
How does goodwill affect NI? cash flow?
- due to changes in accnting rules, you can't amortize goodwill, you can do impairments. If you do
impairments, NI will decrease.
- impairments of goodwill are (at least partially) tax deductible, so even though goodwill
impairments are not real cash charges they will lower your tax bill, which would increase cash flow

What happens to value when you capitalize R&D?

- it depends depends on the tax implications. if for tax purposes you charge all of the R&D at once
(i.e., you don't capitalize it for tax purposes) then nothing will happen to value. but if you amortize
the R&D expenses, you will end up paying more taxes since you are only charging a fraction of the
total R&D expenses every year (i.e., if you charge all of it, you get to lower your taxes immed).
- wrt to cash: if you capitalize instead of expensing (for tax purposes and on the books) R&D, cash
will decrease (which causes firm value to decrease).

Which has greater impact, 10% increase in FCF or 10% increase in WACC?
firm value = FCFF / WACC
FCFF*1.1 / WACC = 1.1 * firm value
FCFF / (WACC * 1.1) = (1/1.1) * firm value

| 1.1 - 1 | - | 1/1.1 - 1 | = 0.1 - 1/11 = 1/110 -> 10% increase in FCF has greater impact.

What happens to IS/BS/CFS when inventories decrease by $100? (assume 40% tax rate)
IS: COGS increases by $100, so NI decreases by $60
CFS: cash increases by $40 because we have an additional $100 of tax deductible expense
BS: Assets decrease by $100, cash increases by $40, SE decreases by $60

Accretion-Dilution Analysis:
You are looking at pro forma # of shares O/S and NI (EPS) AFTER an acquisition has occured. To
do this you have to project the post-acquisition balance sheet and income statement.
In an all stock deal, if a lower P/E company buys a higher P/E company, the deal is dilutive to the
acquirer