Easy Private Equity Practice Questions

144 free easy-difficulty Private Equity questions, drawn live from KomFi's calibrated bank. Build the foundation first: these test the core mechanics every harder question assumes.

1. What is the new ratio (assuming EBITDA is constant)?
2. If a sponsor's entry equity was $200M and they receive a $200M dividend, what is their 'Net Investment' remain
3. In an LBO model, if PIK interest is capitalized, how does it affect the 'Equity Plug' s & Uses table at entry?
4. What is the primary structural objective of a dividend recapitalization in a leveraged buyout context?
5. If the exit occurs after 5 years at the same entry multiple, how does the PIK debt affect the sponsor's exit p
6. In an LBO 'Sources and Uses' table, what item typically acts as the 'plug' to ensure the table balances?
7. Under US GAAP, how does a dividend recapitalization typically affect the company's Balance Sheet?
8. How much pre-interest cash flow remains?
9. If Year 1 Excess Cash Flow is $40M, how much is used to pay down the debt?
10. If the actual SOFR rate drops to 0.50%, what is the total interest rate paid by the borrower?
11. What is the sponsor's required equity contribution?
12. If no principal is repaid, what is the outstanding principal balance at the end of the first year?
13. If the debt is held for 5 years, how much is the mandatory debt repayment over the total period?
14. If no cash interest is paid, what is the outstanding principal balance of the loan at the end of Year 1?
15. How much cash proceeds from the debt facility are actually available to fund the purchase at closing?
16. If the borrower chooses to PIK the 2% for the first year, what is the starting principal balance for the calcu
17. In a Unitranche financing structure, what is the primary feature that distinguishes it from a traditional Seni
18. If the EBITDA of the company is $50M, what is the 'Senior Leverage' multiple?
19. A 'Unitranche' loan facility is often preferred by middle-market private equity sponsors because it combines w
20. Which financing instrument typically features a single-facility loan with a blended interest rate, combining s
21. Which debt instrument is typically structured as a single facility that blends the characteristics of senior a
22. If a borrower has the option to pay interest as 'Cash' at 10% or 'PIK' at 12%, and they choose PIK, what is th
23. If a Private Equity firm uses $50 million of the target's existing balance sheet cash to help fund the acquisi
24. In a 'Compounding PIK' scenario, the interest for Year 2 is calculated on which balance?
25. In the context of S&U, what is 'Financing Fees' typically comprised of?
26. What is 'Original Issue Discount' (OID) in the context of debt structuring?
27. What is the impact of PIK interest on the company's Leverage Ratio (Total Debt / EBITDA) over time, assuming E
28. Which instrument represents 'Hybrid Capital' because it combines features of both debt (fixed interest) and eq
29. Which of the following describes the 'Absolute Priority Rule' in a formal restructuring process?
30. Which of the following is a non-cash 'Source' in an LBO?

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