Financial advisory interview questions shared by candidates
How would you determine an equity value of firm with debt exceeding the enterprise value?
First step: Make sure you ask whether there is cash. (its added back to get from EV to Equity Value) Even though company's equity is negative it still has value as there is probability that the company will recover. Thus equity can be estimated using a put option analysis because a company with negative equity is similar to an out of the money call option.
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