1. Without any further information, I would probably rather own a business generating $2 million in revenue with 30% EBITDA margins than a company generating $1 million in revenue with 60% EBITDA margins. What might my rationale be here?

2. Why is depreciation considered a non-cash expense?

3. Why is EBITDA considered a non-GAAP financial metric?

4. True or False. Net Income includes taxes.

5. True or False. Bond yields increase as bond prices rise.

6. Which financial statement reveals the precise amount the company spent on share repurchases in the previous period?

7. True or False. Gross margin captures a company's general and administrative expenses.

8. True or False. Stockholders are first in line to recover their losses in a bankruptcy.

9. Fill in the blank. Most often, a company's most valuable asset is ______. Often, but not always, a company's largest liability is ______.

10. Fill in the blank. An aggressive corporate capitalization utilizes excessive _____.

11. Fill in the blanks. In the U.S., public companies adhere to a regulatory regime enforced by _________, boards of directors have fiduciary duty to ________ and among a board's most important responsibility is providing guidance to and oversight of ________.

12. Media companies have historically stood out from other industries with a practice of focusing investors on non-GAAP measures like EBITDA. Why?

13. Apple, Inc. reported last week that its balance sheet cash at March 31, 2017 now exceeds an astonishing $257 billion, more than the entire annual economic output of many countries, including Chile, Pakistan and Finland. Please read the following disclosure from Apple in conjunction with its Q1 2017 earnings release and explain 1) whether you think the magnitude of this return of capital plan is satisfactory from a shareholder perspective and 2) why do you think Apple needs to "access the domestic and international debt markets to assist in funding the program"?

Apple announced that its Board of Directors has authorized an increase of $50 billion to the Company’s program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of $300 billion by the end of March 2019.

“We generated strong operating cash flow of $12.5 billion and returned over $10 billion to our investors in the March quarter,” said Luca Maestri, Apple’s CFO. “Given the strength of our business and our confidence in our future, we are happy to announce another $50 billion increase to our capital return program today.”

As part of the latest update to the program, the Board has increased its share repurchase authorization to $210 billion from the $175 billion level announced a year ago.

The Board has approved a 10.5% increase to the Company’s quarterly dividend, and has declared a dividend of $0.63 per share of the Company’s common stock, payable on May 18, 2017 to shareholders of record as of the close of business on May 15, 2017.

From the inception of its capital return program in August 2012 through March 2017, Apple has returned over $211 billion to shareholders, including $151 billion in share repurchases.

The Company plans to continue to access the domestic and international debt markets to assist in funding the program.

14. Refer to Facebook's Q1 2017 investor press release here: https://investor.fb.com/investor-news/press-release-details/2017/Facebook-Reports-First-Quarter-2017-Results/default.aspx (Links to an external site.)Links to an external site.

a. What was Facebook's adjusted EBITDA margin (backing out non-cash stock compensation as well - this is the "adjustment") in the quarter ended 3/31/17?

b. What was Facebook's implied tax rate in Q1 and why do you think it is at that level?

c. Did Facebook repurchase any of its own stock in the quarter?  

d. Did Facebook take an asset impairment charge in the quarter, a write-down of goodwill?

e. What is Facebook's current market capitalization and enterprise value using a market price of $150 per FB share?

f. Provide Facebook's EV/adjusted EBITDA and P/E ratios using $150 per FB share.

g. Hypothetically, let's say Facebook has an agreement to buy Pandora at $14 per P share, or about $3.5 billion. How would you recommend to the Facebook CFO as to how to finance (pay for) the acquisition and why?

h. Do you think that there is another company on the planet with a more impressive set of financial statements than Facebook?