Thank you for purchasing the Wall Street Oasis Technical Interview Guide and Sample Financial Model.

This model was built to

illustrate the typical valuation methodologies used in investment banking and private equity firms. Models are used to analyze
and value companies, as well as compare different operating scenarios to evaluate future performance.

With this model you have the ability to adjust a variety of inputs and view how those adjustments affect the financial statements
and the company's valuation. A very common question in finance interviews is "What happens to the three financial statements
if X changes?" This model will allow you to see how different adjustments flow through the three financial statements.

As you work though this model, keep a few things in mind:

--- Any cell in BLUE is an input cell which you can adjust and observe what happens.
--- Any cell in BLACK is either a formula or a hard input which should not be changed. If you make changes to these cells
the model may not function correctly... so be careful and save a backup version!
--- Many of the cells have comments, which explain what is contained within them. If you hover your mouse over a cell
containing a comment (the little red triangle in the corner of a cell) it will pop up.
--- In addition to sheets containing each of the three financial statements we have also included a basic DCF analysis and
Comps analysis.
--- If you change a number in your model, and it does not seem to update, try hitting the F9 key on your keyboard to
refresh your workbook or make sure iterations are turned on.

We feel as though this model will be a useful tool that allows you to explore how changes in financial assumptions flow through
the financial statements. It also serves as a basic introduction to the primary company valuation techniques.

Study up, and good luck!

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 ABC Corp.
Income Statement
(all figures in millions of dollars)

Historical Projected
2009 2010 2011 2012 2013 2014 Assumptions

Revenues $ 100.0 $ 105.0 $ 110.3 $ 115.8 $ 121.6 $ 127.6 Revenue Growth % 5%

Cost of Goods Sold 30.0 31.5 33.1 34.7 36.5 38.3 COGS as a % of Revenue 30%

Gross Profit 70.0 73.5 77.2 81.0 85.1 89.3

Gross Profit Percentage 70.0% 70.0% 70.0% 70.0% 70.0% 70.0%

Operating Expenses
Selling, General and Administrative 8.0 8.4 8.8 9.3 9.7 10.2 SG&A as a % of Revenue 8%
Depreciation & Amortization 10.0 10.0 10.0 10.0 10.0 10.0
Other Operating Expenses 9.0 9.5 9.9 10.4 10.9 11.5 Other Oper. Exp. As a & of Revenue 9%
Total Operating Expenses 27.0 27.9 28.7 29.7 30.7 31.7

Earnings Before Interest and Taxes 43.0 45.7 48.4 51.4 54.4 57.6

Interest Expense 4.5 4.5 4.5 4.5 4.5 4.5 Cost of Long-Term Debt 9%

Earnings Before Taxes 38.5 41.2 43.9 46.9 49.9 53.1

Income Tax Expense 15.4 16.5 17.6 18.7 20.0 21.3 Income Tax Rate 40%

Net Income $ 23.1 $ 24.7 $ 26.4 $ 28.1 $ 30.0 $ 31.9

Net Income Percentage 23.1% 23.5% 23.9% 24.3% 24.6% 25.0%
 ABC Corp.
Balance Sheet
(all figures in millions of dollars)

Historical Projected
2009 2010 2011 2012 2013 2014 Assumptions
Assets
Current Assets
Cash and Equivalents $ 100.0 $ 119.6 $ 145.7 $ 173.5 $ 203.2 $ 234.8
Inventory 10.0 11.7 12.3 12.9 13.5 14.2 Inventory Turnover Ratio 9.0x
Accounts Receivable 6.0 5.8 6.0 6.3 6.7 7.0 Days Sales Outstanding 20 Days
Other Current Assets 4.0 4.2 4.4 4.6 4.9 5.1 Other Current Assets as a % of Revenue 4%
Total Current Assets 120.0 141.2 168.4 197.3 228.2 261.0
Net PP&E 100.0 100.0 100.0 100.0 100.0 100.0

Total Assets $ 220.0 $ 241.2 $ 268.4 $ 297.3 $ 328.2 $ 361.0

Liabilities
Accounts Payable 7.0 3.9 4.1 4.3 4.5 4.7 Days Payable Outstanding 45 Days
Other Current Liabilities 13.0 12.6 13.2 13.9 14.6 15.3 Other Current Liabilities as a % of Revenue 12%
Long-Term Debt 50.0 50.0 50.0 50.0 50.0 50.0

Total Liabilities 70.0 66.5 67.3 68.2 69.1 70.0

Stockholders' Equity
Common Stock 50.0 50.0 50.0 50.0 50.0 50.0
Retained Earnings 100.0 124.7 151.0 179.2 209.1 241.0

Total Stockholders' Equity 150.0 174.7 201.0 229.2 259.1 291.0

Total Liabilities and Equity 220.0 241.2 268.4 297.3 328.2 361.0

Parity Check 0.0 0.0 0.0 0.0 0.0 0.0

 ABC Corp.
Statement of Cash Flows
(all figures in millions of dollars)

Historical Projected
2009 2010 2011 2012 2013 2014

Beginning Cash NA 100.0 119.6 145.7 173.5 203.2

Net Income NA 24.7 26.4 28.1 30.0 31.9

Cash Flow from Operating Activities

Depreciation & Amortization NA 10.0 10.0 10.0 10.0 10.0
(Increase)/Decrease in Current Assets NA (1.6) (1.1) (1.1) (1.2) (1.3)
Increase/(Decrease) in Current Liabilities NA (3.5) 0.8 0.9 0.9 1.0

Net cash from Operating Activities NA 29.6 36.1 37.8 39.7 41.6

Cash Flow from Investing Activities

Capital Expenditures NA (10.0) (10.0) (10.0) (10.0) (10.0)
Other Cash Flows From Investing NA 0.0 0.0 0.0 0.0 0.0

Net cash from Investing Activities NA (10.0) (10.0) (10.0) (10.0) (10.0)

Cash Flow from Financing Activities

Dividend (Payments) NA 0.0 0.0 0.0 0.0 0.0
Sale/(Purchase) of Stock NA 0.0 0.0 0.0 0.0 0.0
Increase/(Decrease) in LT Debt NA 0.0 0.0 0.0 0.0 0.0

Net cash from Financing Activities NA 0.0 0.0 0.0 0.0 0.0

Change in Cash and Equivalents NA 19.6 26.1 27.8 29.7 31.6

Ending Cash NA 119.6 145.7 173.5 203.2 234.8

 ABC Corp.
Discounted Cash Flow Model
(all figures in millions of dollars)

Step One: Project Out Free Cash Flows

Projected
2010 2011 2012 2013 2014
Earnings Before Interest and Taxes 45.7 48.4 51.4 54.4 57.6
x (1-Tax Rate) 27.4 29.1 30.8 32.7 34.6
+ Depreciation and Amortization 10.0 10.0 10.0 10.0 10.0
- Capital Expenditures 10.0 10.0 10.0 10.0 10.0
- Change in Net Working Capital 5.1 0.3 0.3 0.3 0.3
= Free Cash Flow 22.3 28.8 30.5 32.4 34.3

Step Two: Calculate WACC

WACC = (Ke)(E/(D+E+P)) + (Kd)(1-t)(D/(D+E+P)) + (Kp)(P/(D+E+P))

Equity Piece Debt Piece Preferred Piece

Calculate Cost of Equity Using CAPM Risk-Free Market Risk Company β

1.0% 7.9% 1.5
Capital Assets Pricing Model
Cost of Equity = Rf + β(Rm - Rf) 11.3%

Market Cap Debt Preferred

Amounts 100.0 50.0 0.0
Cost of Financing 11.3% 9.0% 0.0%

Equity Debt Preferred

WACC= 7.5% 1.8% 0.0%
Total WACC= 9.3%
Step Three: Estimate FCF Beyond Year 5

Choose Either Terminal Growth Multiple (1) or Perpetuity Method (2) 1 Terminal Value= $541.1

Terminal Growth Multiple Method

Final Year EBITDA= 67.6
Enterprise Value / EBITDA Multiple 8.0x
Final Year Valuation= 541.1

Perpetuity Method FCF5(1 + g)

(WACC - g)

Growth Rate 3.0%

Terminal Value= 557.3

Step Four: Discount Cash Flows Back to Year 0 Using WACC as the Discount Rate
Terminal
2010 2011 2012 2013 2014 Value
Cash Flow 22.3 28.8 30.5 32.4 34.3 541.1
Present Value of Cash Flow 20.4 24.1 23.4 22.7 21.9 346.3

Enterprise Value of Company based on DCF 458.7

Step Five: Only if you are looking to calculate a price per share

Enterprise Value of Company based on DCF 458.7

- Long-Term Debt 50.0
= Value of Equity 408.7

Shares Outstanding (millions) 100.0

Stock Price per Share $4.09
 ABC Corp.
Comparable Companies Analysis
(all figures in millions of dollars)

EV/EBITDA Ratio P/E Ratio

Comparable Company A 6.8x Comparable Company A 12.0x
Comparable Company B 6.0x Comparable Company B 11.0x
Comparable Company C 7.2x Comparable Company C 10.8x
Comparable Company D 9.0x Comparable Company D 13.4x
Comparable Company E 7.8x Comparable Company E 15.0x

Average of Comparable Companies 7.4x Average of Comparable Companies 12.4x

EBITDA of ABC Corp. 53.0 Earnings of ABC Corp. 23.1

Enterprise Value Based on Comps. 390.1 Equity Value of ABC Corp. 287.4

Shares Outstanding (millions) 100.0

Enterprise Value of ABC Corp. 390.1 Stock Price per Share $2.87
- Long-Term Debt 50.0
= Value of Equity 340.1

Shares Outstanding (millions) 100.0

Stock Price per Share $3.40