The 3 hardest interview questions I got while recruiting

#shorts
Yup, these were pretty hard

[@vikramjolly271]

The last one was kind of same for me too! While interviewing for restructuring, I was asked a similar market sizing question

[@MattTactacan]

please do a follow up where you answer this!!

[@YongyotKorean]

Answer of the first question: the fcfe of 2 companies forecast are different from different assumptions lead to different equity value.

[@sbtopjosh4098]

I would have answered the equity value would have been different if they were both from two different industries

[@steffenvergeylen1097]

​@@sbtopjosh4098yes that's what I was thinking too. Different industries means different multiples

[@62294838]

They didn’t say whether by equity value they meant it’s justified or market value. If they are saying market value then it’s a whole lot of different answer that is qualitative rather than quantitative. Also, the most obvious answer should be dividend payout policy is different even they can have the same financial statement. FCFF and FCFE are more of the two definition of Equity value so that might not be the best answer.

[@hebdidjsnff1628]

@@sbtopjosh4098same fs implicit that two companies are in same industry. It is very very hard to become totally same when they are in different industry

[@willwei1162]

wrong

[@ajaykadam7830]

There are several reasons why two companies with the same financial statements (e.g., same revenue, profit, assets, liabilities, and cash flows) may have different equity values: *Growth prospects*: Investors may expect one company to grow faster or more sustainably, leading to a higher equity value.

[@kvin9210]

I also don't like accounting lol It's so dry and boring

[@hanguyen5101997]

Me in accounting 👀.

[@D_veraz]

My answer to the 3rd one... Avg crosses per point (4) x points per game (6) x games per set (10) x sets (4) = 960 bout 1k per match. 127 matches 127k + female matches x 0.7 (bo3 instead of bo5)... bout 200k. Also you could add junior tourny or training since it wasnt specified what counts for Wimbledon tourny.

[@TLiu-1b]

How would you answer if you don't watch tennis 😅

[@maxipowerfitness6273]

Great 🎉 thnksss for sharing 😊🎉🎉🎉

[@thomas.d.peterson]

Start with the men’s champion round, estimate minimum number of times ball needs to cross the net to win. 4 per game, 6 games for a set, 3 sets to win. 72. 128 participants, so thats’s 127 matches. Multiply championship game ball cross across matches. 127x72=9144. Etc etc

[@dac8939]

Each set has far more than 6 games. Average would be about 9 games won per set

[@maxipowerfitness6273]

😂wow 😅🎉🎉🎉🎉

[@redahassoun2573]

1st question: they’re not in the same country

[@davidvega1087]

How did you solve the market sizing question?

[@lcandothat]

It’s goodwill

[@Kyle_P2022]

@@lcandothat No it’s not

[@lcandothat]

@@Kyle_P2022 why

[@Vistafy]

Goodwill is a FS item, and if the FS are identical then it can’t be goodwill ..

[@Mickk0205]

I think the answer to the first question is different trading comps. If both companies trade against different multiples, one will trade at a higher enterprise value (and thus equity value) than the second.

[@TrangNguyen-qu1jc]

What's the answer for the first question pls?

[@andreabarral7282]

Differenti returns on invested Capital, differenti value of non operating assets etc...

[@kvanc2763]

growth rate

[@Vatican_Banker]

Equity value + net debt = enterprise value Enterprise value is often determined by industry multiples Different multiples means different EVs Different EVs + same net debt = different Equity values

[@sheppy5152]

@@Vatican_BankerI’m a high school student and what you said is all gibberish to me, am I doomed?

[@Vatican_Banker]

@@sheppy5152 no. Google Enterprise value and equity value. Know the formula inside and out (it’s very simple).

[@paulhan7770]

The first question is because there is a difference in equity and liab. Example below A=L+SE 10=4+6 10=5+5 Assets are the same but the way the capitals are raised is different. First example shows that the company raised more money through their own funds and shareholders.

[@dave1T]

What came my mind was share price. Considering equity value is a function of number shares outstanding and share price. I mean the financial statements are exactly the same won't the the assets and the liabilities also be exactly the same. Even shares outstanding are exactly the same. The only difference here is the share price which may be driven By purely market forces. I get where you are coming from tho. I could be wrong. Thoughts?

[@m.a.3844]

@@dave1T you can look at Equity Value in different ways. It can be the book value noted in the balance sheet, it can be the share price multiplied with share number, it could also be derived from the discounted levered FCFs that are based on revenue growth estimates etc

[@m.a.3844]

@Paul Financial Statements of both companies are the same!

[@leandrov07013]

@@dave1T i thought the same

[@dave1T]

@@m.a.3844 interesting.

[@62294838]

Becuz dividend payout policy can be different.

[@misinfluence]

Dividends issued are on the financial statements bc you subtract them from net income It’s bc they are in different industries so different value. Or maybe an industry is experiencing a shock atm (financial institutions in 2008, tech companies during the .com bubble, etc) so the equity value takes a hit

[@ulthera]

bb investment banker로 답하자면 1. 두 회사에 대한 성장기대치가 다르거나 속한 산업이 다른 경우, 재무제표상 수치가 완전히 같더라도 주식가치는 당연히 다름. 2. 생략 3. 답은 없고 접근방식만 유의하면 됨.

[@seunghyunsong]

형님 대학교 2학년2학기인데 뭐 부터 시작하는게 좋을까요

[@ZombiemanOhhellnaw]

You said accounting was your least favorite subject going into a FINANCE job.. 😬

[@gorazda4908]

How do you find the answer 3rd

[@friendscallmeap]

In tennis a player who wins 3 sets will win. 3 sets contain 6 games and each game needs 4 points to be won. So you get 3*6*4 = 72 However, in half of these (36 instances), the person will be serving the ball, meaning that he can win the game with the ball crossing the net once. 36 occurrences of the ball crossing the net. When the player receives the ball, he can only win with a return, so that will be the ball crossing the net twice. 36*2 = 72 36 + 36*2 = 108 Typically the tournament has 128 participants, so 127 matches 127*108 = 13716

[@Larry-nd7gv]

I don’t know if i’m on the right path for the first question, but it sounds to me like a M&M concept question. According to M&M, capital structure is irrelevant in the valuation of a firm so if the first firm’s equity is different that means its either un-levered or using less equity to finance its operations? The second firm is levered and therefore able to utilize an interest tax shield, at cost of of its equity?

[@ScenicWisdom]

You’ve over thought it. Simply that different companies could be selling different products in different markets with different supply/demand and be run by different management teams. All these contribute to market perception and valuation

[@MarketWizard546]

Isn't the answer to the first question future expectation of the company?

[@sumanthasaha61]

I think the question asked about Book Equity not Market Cap.

[@Paul-ul8lh]

I dont get the first one 😭

[@amithmathew6561]

If I understand the question correctly, the "Equity" in the question is referring to market cap (share price x shares outstanding). Financial statements reflect historical performance. So even if two companies have the exact same financial statements (indicating historical performance was same), the market might still value each company differently since remember valuation is always forward looking. If each of them have different future growth prospects, this in turn will result in different equity values (i.e. market cap). This is a very high level answer, but a more detailed one would also involve discussing a valuation method like DCF, which takes in to account future cash flows that each company expects to generate.

[@lcandothat]

You can just say goodwill 👍

[@drakefortels4519]

@@amithmathew6561 this is the only correct answer to the question in this comment section

[@drakefortels4519]

@@lcandothat not true

[@lcandothat]

@@drakefortels4519 the differences in valuation are due to goodwill you condescending cornball

[@abba5.n]

❤

[@RAJohnson713]

How did u calculate the tennis one?

[@MOTM1234]

So, with questions like that, its not about the actual answer/# you end up giving, but rather, they want you to walk them through how you determined the answer/# you give them. And so, with all market sizing Qs, you start with a big number and break it down systematically. And it's how you determine the breakdown that is of the real value. Now, after reading this explanation, and if you still only want to know the answer/#, then you've missed the whole point.

[@ScenicWisdom]

Start with number of individual tournaments ie men’s singles, woman’s singles, same sex doubles, mixed doubles and so on. Then you know factor the number of rounds, ie 1st through to final, then factor that men play 5 sets and women 3, then estimate average number of games per set, points per game, net crosses per point and you have your number

[@silver3088ify]

My brother is a accountant and I have a 2 year degree in a trade and I make 6 figures he doesn't moto is it dont matter what you do have paperwork and wake up like the underdog daily that $ coming

[@lazizaakramova8602]

Could anyone help with the last question please ???

[@Ari-lu5ve]

for real

[@friendscallmeap]

In tennis a player who wins 3 sets will win. 3 sets contain 6 games and each game needs 4 points to be won. So you get 3*6*4 = 72 However, in half of these (36 instances), the person will be serving the ball, meaning that he can win the game with the ball crossing the net once. 36 occurrences of the ball crossing the net. When the player receives the ball, he can only win with a return, so that will be the ball crossing the net twice. 36*2 = 72 36 + 36*2 = 108 Typically the tournament has 128 participants, so 127 matches 127*108 = 13716

[@2beokisgr8]

If we only count Men's competitive matches then I think 6 rounds in the tournament? So 2^6 is number of games total. Max 5 sets, probably 4 average. Min 6 games per set, probably 9 average? Min 4 points per game, probably 10 average? (Where deuce makes it higher than you might initially think) and perhaps 4 shots per point? (A fair amount of unreturned serves). That gives 2^6*4*9*10*4 = 92,160 times. If we include warms-ups, other categories e.g. doubles, women's, etc then we continue to build our the estimate with a similar framework

[@misinfluence]

It’s just market sizing/estimation. You don’t have to be exact just follow a sequential path of logic. They just want to see how you think; also use whole even numbers bc it makes it easier Similar questions I’ve gotten: how many ping pong balls fit in a 747? How many fishing rods are there in the U.S.? How many Starbucks are in London?

[@gonzalomoreno761]

Why don’t you answer them?!?

[@andrewc4156]

형 한국사람이엇어??

[@lukew3224]

Financial statements is reflection of past they do not reflect future which is what equity valuation is based on. One company got better future growth

[@pony44]

What's the answer for the final question ❓

[@barisyasar7090]

This isn't really a question that you should give an exact answer to, the purpose is to know your problem solving ability, the way to answer it correctly is to provide argument and bases for how you'd solve this question

[@friendscallmeap]

There are called Fermi Questions and they evaluate your thinking patterns, you simply need to estimate In tennis a player who wins 3 sets will win. 3 sets contain 6 games and each game needs 4 points to be won. So you get 3*6*4 = 72 However, in half of these (36 instances), the person will be serving the ball, meaning that he can win the game with the ball crossing the net once. 36 occurrences of the ball crossing the net. When the player receives the ball, he can only win with a return, so that will be the ball crossing the net twice. 36*2 = 72 36 + 36*2 = 108 Typically the tournament has 128 participants, so 127 matches 127*108 = 13716