⏱ Reading Time: 2 Minutes 35 Seconds

Happy Monday, future bankers!

Hope everyone is doing well! Today we’re going over how to account for preferred stock in enterprise value, a time you had to take a lead, and the news that Boeing’s CEO will step down amidst the company’s safety struggles.

🚀 Let’s get into it.

🔢 Technical Question

Why is preferred stock accounted for when calculating enterprise value?

Enterprise Value (EV) is a measure of a company’s total value, considering all ownership interests and asset claims from both debt and equity.

Now, let’s break down why preferred stock is included in this calculation:

1. Hybrid Nature: Preferred stock is a hybrid security, possessing features of both equity and debt. It pays out a fixed dividend and has a higher claim to a company’s assets than equity investors do.

2. Treatment as Debt: Due to its debt-like characteristics, such as the obligation to pay dividends, preferred stock is treated more like debt in this calculation. When a company is acquired, preferred shareholders are often repaid as if they were creditors.

3. Investor Claims: Enterprise Value represents the value of the company’s core business operations to all investors, including equity, debt, and preferred stockholders. Since preferred stockholders have a claim on the company’s assets, they are considered in the calculation of EV.

In conclusion, the inclusion of preferred stock in the calculation of Enterprise Value is due to its debt-like characteristics and the claims preferred stockholders have on the company’s assets.

🗣 Behavioral Question

Tell me about a time that you had to take charge over a project.

It’s best to use the STAR method when responding to a question like this. Here’s a step-by-step guide:

1. Situation: Start by setting the scene. Describe the context within which you had to take charge of a project. This could be a group assignment at school, a previous internship, or even a club or sports team.

2. Task: Explain the challenge or problem that you were faced with. What was the project? Why did you need to take charge? What was at stake?

3. Action: This is the most crucial part of your answer. Detail the specific actions you took to take charge of the project. Did you delegate tasks? Did you set up meetings or follow a specific plan? Be specific about what you did and why.

4. Result: Finally, share the outcome of your actions. Did the project succeed? What did you learn from the experience? If possible, quantify the results to make your story more compelling.

Remember to focus on your leadership skills, your ability to work in a team, and your problem-solving abilities. Be honest, but don’t be afraid to highlight your accomplishments.

🗞 Industry News

✈️ Boeing CEO Announces He’ll Step Down

Boeing CEO Dave Calhoun has announced he will step down at the end of 2024, marking a significant change in the company’s leadership. This decision comes amidst increasing calls from airlines and regulators for major changes at Boeing due to a series of quality and manufacturing flaws with its planes. The scrutiny has been particularly intense following a recent accident involving a Boeing 737 Max. Calhoun has emphasized the need for humility, transparency, and a total commitment to safety and quality at every level of the company.

Calhoun, who has been a board member at Boeing for over a decade, took the top job in January 2020. He has consistently assured investors, airline customers, and the general public that Boeing will get its quality struggles under control. Despite these challenges and a 26% drop in shares this year, Boeing’s stock was up more than 1% in afternoon trading on Monday following the announcements.

Read more about this story below.

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