Valuation Essentials
FREEDCF, trading comps, transaction comps, and how to defend valuation ranges. Core skills for all buy-side and sell-side roles.
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Modules
Why Companies Are Worth What They're Worth
40 questions
Value drivers framework: cash flows, growth, risk, reinvestment needs, returns on capital; enterprise value vs equity value at a conceptual level; what makes one business more valuable than another; when multiples make sense vs when they mislead; how interviewers expect you to reason about value.
Discounted Cash Flow (DCF) Fundamentals
40 questions
DCF building blocks: unlevered FCF intuition (EBIT, taxes, D&A, capex, NWC); forecast logic and key drivers; discounting and present value; terminal value methods (perpetuity vs exit multiple); WACC intuition at a high level; sanity checks and common DCF interview pitfalls.
Trading Comps & Multiple Selection
40 questions
Comparable companies logic: peer set selection, size/growth/margin matching; equity value vs enterprise value multiples; which multiple for which business (EV/EBITDA, EV/Revenue, P/E); normalization (one-offs, run-rate); interpreting why multiples differ; quick comps-style interview questions.
Transaction Comps & Control Premiums
40 questions
Precedent transactions logic: deal context, cycle effects, synergy expectations; control premiums and why they exist; when premiums are higher/lower; differences vs trading comps; using transaction comps to frame valuation ranges in interviews; pitfalls (small sample sizes, outdated deals, special situations).
Valuation Sensitivities & Interview Pitfalls
40 questions
Sensitivity thinking: what moves value most (growth, margin, reinvestment, discount rate, terminal assumptions); scenario framing (base/up/down); triangulating value using multiple methods; defending a valuation range under pressure; classic traps and gotcha questions (EV vs equity, double counting, inconsistent assumptions).
Frequently Asked Questions
What valuation methods are most important for finance interviews?
Finance interviews focus on DCF analysis (discounted cash flow), comparable company analysis (trading comps), precedent transaction analysis (deal comps), and LBO analysis for PE roles. You'll be expected to know when to use each method and how to triangulate a valuation range from multiple approaches.
How do you walk through a DCF analysis in an interview?
Start with revenue projections and work down to free cash flow (EBIT × (1-tax) + D&A - CapEx - ΔNWC). Project 5-10 years, then calculate a terminal value using either the Gordon Growth Model or exit multiple method. Discount all cash flows back at WACC to get enterprise value. Subtract net debt to get equity value, divide by shares for price per share.
What is the difference between enterprise value and equity value?
Enterprise value (EV) represents the total value of a business to ALL capital providers — equity holders and debt holders. Equity value represents only what belongs to shareholders. EV = Equity Value + Net Debt (debt minus cash). EV-based multiples like EV/EBITDA are capital structure neutral; equity-based multiples like P/E depend on leverage.
Is Valuation Essentials free on Finance Interview Prep?
Yes — the Valuation Essentials track is completely free. It covers DCF, comps, EV/equity value, WACC, and precedent transactions with real interview questions and instant explanations.