Investment Banking
5 enterprise value questions of the kind asked in investment banking interviews. Each carries a model answer, the concepts a complete response must hit, and graded feedback on your own attempt.
Asked in essentially every investment banking interview. Expect follow-ups immediately.
Explain the difference between enterprise value and equity value. Why do we use each, and how do you get from one to the other?
A foundational valuation question before candidates discuss share-price upside.
A company has 100 million shares at $20, $500m of debt and $200m of cash. Calculate its market capitalisation and enterprise value. Why does the distinction matter to an equity investor?
The immediate follow-up to the EV vs. equity value question.
Why is cash subtracted when calculating enterprise value? Is all cash treated the same way?
A curveball used to see whether you reason from first principles.
Can enterprise value be negative? What would that imply, and would you buy such a company?
Tests whether you can reason about debt-like items rather than recite a formula.
Beyond debt and cash, what other items belong in the enterprise value bridge? Explain the principle you'd use to decide whether something is a debt-like item.
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Firm names indicate where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with the firms named.