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Private Equity

Lecture 5-6: Deal Structuring (Financing)

Comprehensive exam-prep quiz covering leveraged finance: sources and uses of funds, management incentives and equity structuring, the leverage effect on EV and equity, key factors determining leverage, LBO debt structures, loan underwriting options, and loan agreements.

Question 48 of 50

Starting from EBIT, order the steps of the cash flow waterfall used to arrive at cash available for debt service and then the residual cash flow.

Drag the steps into the correct order. You can also use the arrow buttons.

Order the process: arrange every step from first to last, then check your answer.
1

Residual cash flow

2

Deduct cash interest, principal repayments and cash tax

3

Cash available for debt service

4

Deduct the increase in Net Working Capital

5

Deduct Capital Expenditure

6

Operating Profit (EBIT)

7

Add back non-cash expenses / income (e.g. depreciation and amortisation)