Cash Flow Related Questions in Investment Banking & Private Equity Interviews

This page lists cash flow-related questions our students have encountered in Investment Banking & Private Equity Interviews since 2008.

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What is a stub period? When does the stub period arise when valuing a company using the DCF method?

Does the midyear convention have a larger impact on the value of the business when the discount rate is higher or lower?

What DCF assumptions have the most weight on your decision to use a midyear convention?

How does midyear convention impact terminal value calculation?

What is the midyear convention? When and why do we use the midyear convention?

Do you account for business cycles when preparing a cash flow forecast? If yes, how?

Why is normalization done?

What are normalized earnings?

How do you deal with onetime expenses and/or incomes in EBIT when dealing with cash flows?

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