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CS Professional Corporate Restructuring, Valuation and Insolvency Flashcards
50 question-and-answer cards covering Corporate Restructuring, Valuation and Insolvency as it is examined in CS Professional. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Corporate Restructuring, Valuation and Insolvency deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What is the purpose of a 'no-objection certificate' from stock exchanges in a listed company merger?
To ensure the scheme is in the interest of shareholders and complies with securities laws; the exchanges (after SEBI's observation) issue an observation/NOC letter that must be filed with the NCLT petition.
What are the three broad approaches to business valuation?
(1) Asset-based approach (net asset value), (2) Income approach (e.g., DCF, capitalization of earnings), and (3) Market approach (comparable companies / comparable transactions multiples).
What is the Net Asset Value (NAV) method of valuation?
Valuation based on the net worth of the company = total assets (at book or revalued amounts) minus total external liabilities; value per share = net assets attributable to equity ÷ number of equity shares.
What is the Discounted Cash Flow (DCF) method?
An income approach that values a business as the present value of its expected future free cash flows, discounted at an appropriate rate (usually WACC), plus the present value of terminal value.
Write the formula for terminal value using the Gordon Growth (perpetuity) model.
Terminal Value = [FCF in first year after forecast × (1 + g)] ÷ (r − g), or = FCF(n+1) ÷ (r − g); where r = discount rate and g = perpetual growth rate.
What is the WACC (Weighted Average Cost of Capital) formula?
WACC = (E/V × Ke) + (D/V × Kd × (1 − t)); where E = equity, D = debt, V = E+D, Ke = cost of equity, Kd = cost of debt, t = tax rate.
What does the Capital Asset Pricing Model (CAPM) compute and what is its formula?
It computes the cost of equity (expected return): Ke = Rf + β × (Rm − Rf); where Rf = risk-free rate, β = beta, and (Rm − Rf) = market risk premium.
What is the Market Price (Yield) method of valuation?
A market approach valuing shares of a listed company based on the prevailing/average quoted market price over a relevant period, reflecting what investors are willing to pay.
What is the Comparable Companies Multiple (CCM) / relative valuation method?
Valuation by applying valuation multiples (e.g., P/E, EV/EBITDA, P/BV) derived from comparable listed companies or comparable transactions to the target's relevant financial metric.
What is the Earnings Capitalization (Profit-Earning Capacity Value) method?
Value = Future Maintainable Profit (FMP) ÷ Capitalization rate (or × P/E multiple); it capitalizes the sustainable maintainable earnings at an expected rate of return.
What is the difference between Enterprise Value and Equity Value?
Enterprise Value (EV) = value of the whole business to all capital providers = Equity Value + Net Debt (debt − cash). Equity Value is the value attributable only to equity shareholders.
Why might different valuation methods be averaged using weights (Fair Value method)?
Because no single method captures all aspects; the 'Fair Value' (e.g., NAV, yield/earnings, and market methods) is computed as a weighted average to arrive at a balanced, defensible value, especially for swap ratios.
What is goodwill in the context of valuation?
An intangible asset representing the excess of purchase consideration over the fair value of identifiable net assets acquired; it reflects reputation, customer relationships, brand, and earning capacity beyond tangible assets.
How is a redeemable preference share valued?
As the present value of the expected future preference dividends plus the present value of the redemption amount, discounted at the investor's required rate of return.
What is the formula for valuing an irredeemable (perpetual) preference share?
Value = Annual Preference Dividend ÷ Required rate of return (Kp); i.e., it is a perpetuity of fixed dividends.
How is a bond/debenture valued?
Value = present value of periodic interest (coupon) payments + present value of the redemption (face) value, both discounted at the required yield/market rate (YTM).
What is Yield to Maturity (YTM) of a bond?
The total annualized rate of return earned if the bond is held until maturity — the discount rate that equates the present value of all future cash flows (coupons + redemption) to the bond's current market price.
State the Gordon (Dividend Growth) Model for valuing an equity share.
Value of share P0 = D1 ÷ (Ke − g); where D1 = expected dividend next year, Ke = cost of equity, and g = constant growth rate of dividends.
What is the relationship between bond price and market interest rates?
Inverse: when market interest rates rise, bond prices fall, and when rates fall, bond prices rise (because the fixed coupon becomes relatively less/more attractive).
What are intangible assets? Give examples.
Identifiable non-monetary assets without physical substance that provide future economic benefits — e.g., patents, trademarks, copyrights, brands, goodwill, licenses, franchises, and know-how.
What are the three approaches to valuing intangible assets?
(1) Cost approach (cost to create/replace the asset), (2) Market approach (prices of comparable intangible transactions), and (3) Income approach (present value of future economic benefits attributable to the intangible).
What is the 'Relief from Royalty' method of intangible valuation?
An income-based method valuing an intangible (e.g., a brand/trademark) as the present value of the royalty payments the owner is saved from paying because it owns, rather than licenses, the asset.
What is the 'Multi-Period Excess Earnings Method (MEEM)' for intangibles?
An income approach that isolates the cash flows attributable to a specific intangible by deducting contributory asset charges (returns on other assets) from total earnings, then discounts the excess earnings to present value.
What is the 'With and Without' method of valuing an intangible asset?
An income method valuing an intangible as the difference between the business's value (or cash flows) with the intangible in place and its value without it — the incremental value attributable to that intangible.
What this deck covers
The Corporate Restructuring, Valuation and Insolvency deck follows the CS Professional Corporate Restructuring, Valuation and Insolvency syllabus — 2 chapters and 6 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 25.0 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 182 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Corporate Restructuring, Valuation and Insolvency flashcards FAQ
How many Corporate Restructuring, Valuation and Insolvency flashcards are in this CS Professional deck?
50 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these CS Professional flashcards free?
Yes. The preview here is free to read with no signup, and the full 50-card deck is free inside the Examius app.
What do the Corporate Restructuring, Valuation and Insolvency cards cover?
They follow the CS Professional Corporate Restructuring, Valuation and Insolvency syllabus — 2 chapters and 6 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.