IB interview prep
About this lesson
⁉️ A company trades at $30 with 50M shares. Revenue is $600M at a 25% EBITDA margin. It trades at 14x EV/EBITDA and has $150M of cash. How much debt is outstanding? Share price: $30 Diluted shares: 50M Revenue: $600M EBITDA margin: 25% EV/EBITDA multiple: 14x Cash: $150M To solve these puzzle questions, you always start with the end in mind. In this case, we need to solve for total debt, so we start there and work backward. We can use the enterprise value formula: EV = Equity + Debt − Cash. The missing piece is debt. We have revenue and EBITDA margin, so we can use the multiple to calculate EV. We have share price and share count, so we can get equity (market cap). Once we have EV and equity, we’re still missing debt, so we solve for it using what we do have. Let’s walk it through: EBITDA = $600M * 25% = $150M EV = $150M * 14x = $2,100M Market cap = 50M * $30 = $1,500M Net debt = EV − market cap = $2,100M − $1,500M = $600M Total debt = net debt + cash = $600M + $150M = $750M 💵 So total debt is $750M. 🧠 The rule of thumb: always start with the end in mind and work backward. 💡 Save this before your next EB or BB interview. Follow @FinanceableTraining to level up your IB/PE game every day. #investmentbanking #privateequity #interviewprep #financeinterviews #ibinterviewquestions
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