|Neel
Salary kitna loge
TECHNICAL QUESTIONS
1.Walk me through DCF?
A DCF (Discounted Cash Flow) values a company
based on its future cash flows.
Steps:
1. Forecast Free Cash Flows (5–10 years)
2. Calculate Terminal Value
3. Discount everything to Present Value using
WACC
→
4. Add them Enterprise Value
→
5. Subtract net debt Equity Value
Key idea: Value today = value of all future cash
flows, discounted.
|By Neel
2. What is WACC ?
WACC is the Weighted Average Cost of Capital.
It’s the average return a company must pay to
finance itself through:
🔹 Equity (like shares)
🔹 Debt (like loans or bonds)
Formula (simplified):
WACC = (% of equity × Cost of equity) + (% of
debt × Cost of debt × (1 – Tax rate))
3.Enterprise Value vs Equity Value?
Enterprise Value (EV) = Total cost to buy the
company including its debt, minus any cash.
EV = Market Cap + Debt – Cash
Equity Value = Value just for the
shareholders (i.e. market cap)
EV is used for comparing businesses, Equity
Value is for shareholders.
Investors use EV for ratios like EV/EBITDA to
|By Neel
compare companies more fairly.
4. What are the 3 financial statements?
Income Statement (aka P&L) – Shows
company’s performance (Revenue –
Expenses = Net Income)
Balance Sheet – Snapshot of assets,
liabilities, and equity at a point in time
Cash Flow Statement – Tracks actual cash
inflow/outflow under 3 heads:
5. How are the 3 financial statements
connected?
Everything starts with Net Income (from
Income Statement):
→ Added to Retained Earnings in Balance
Sheet
→ Used as starting point in Cash Flow
Statement
Changes in Working Capital, CapEx,
Depreciation flow through all 3 |By Neel
6. What is EBITDA?
EBITDA = Earnings Before Interest, Taxes,
Depreciation & Amortization
It shows the operational profitability of a
company – before any financing or tax
impact.
Used to compare companies in different
tax or debt environments
But: It ignores capital expenditures – so
use it wisely!
7.What is Free Cash Flow (FCF)?
FCF = Real cash a company can reinvest or
return to shareholders.
Formula:
FCF = EBIT × (1 – Tax Rate) + D&A – CapEx –
Change in Working Capital
|By Neel
8. Why subtract cash in Enterprise Value?
EV = Equity + Debt – Cash
Because when buying a company, you can
use its own cash to repay debt or invest.
It’s like buying a house and getting a
locker full of cash with it – it lowers the
true cost.
9. What is Accretion and dilution?
Used in M&A (Mergers & Acquisitions) to
judge if a deal is good for shareholders:
Accretive Deal = EPS (Earnings per Share)
increases after merger
Dilutive Deal = EPS goes down after merger
10.What is Beta?
Beta measures how volatile a stock is
compared to the market.
.
|By Neel
11. Explain CAPM?
CAPM = Capital Asset Pricing Model
It calculates how much return investors
expect for taking risk in a stock.
Formula:
Cost of Equity = Risk-Free Rate + Beta ×
(Market Return – Risk-Free Rate)
Risk-Free Rate = 10-year government bond
CAPM helps us decide:
Is this return worth the risk?
”
12. What is Working Capital?
Working Capital = Current Assets – Current
Liabilities
It shows how much cash is tied up in daily
operations.
Positive WC = Company can easily pay bills
Negative WC = May struggle with liquidity
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13. What are common valuation multiples?
Valuation multiples help compare companies
quickly. Common ones:
EV/EBITDA – Clean measure of profitability
P/E Ratio – Price compared to earnings
EV/Revenue – For loss-making or early-stage
companies
P/B Ratio – Price compared to book value
(assets – liabilities)
14. Why do you want to work in finance?”
"I’ve always enjoyed solving problems using
numbers.
Finance lets me combine business, logic, and
strategy – whether it's valuing companies or
analyzing markets.
The idea of helping businesses grow and making
data-driven decisions really excites me."
|By Neel
15. Company you’d invest in today?
Pick stock: Example — TCS
Strong fundamentals
High ROE, solid margins
Valuation reasonable
Long-term upside
Show thought process, not stock tips
|By Neel
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