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Happy Friday, future bankers!

Hope everyone is doing well! Today we’re covering how paying down debt affects enterprise value, what you’re looking for in a career, and the latest on the jobs report.

🚀 Let’s get into it.

🔢 Technical Question

How would paying down $500 million of debt affect a company’s enterprise value?

Enterprise Value (EV) is calculated as the market capitalization of a company plus its total debt minus cash and cash equivalents.

When a company pays down its debt by $500 million, it is essentially reducing its total debt by that amount. However, this action does not directly affect the company’s Enterprise Value. Here’s why:

1. Decrease in Debt: When the company pays down $500 million of debt, its total debt decreases by $500 million.

2. Decrease in Cash: To pay down the debt, the company would use its cash or cash equivalents. This means its cash and cash equivalents also decrease by $500 million.

Since both debt and cash decrease by the same amount, these changes offset each other in the Enterprise Value calculation, resulting in no change to the Enterprise Value.

However, it’s important to note that while the Enterprise Value might remain unchanged, the action of paying down debt can have other effects on the company’s financial health, such as improving its Debt to Equity ratio or increasing its attractiveness to investors. These factors could indirectly influence the company’s market capitalization and thus its Enterprise Value in the long run.

🗣 Behavioral Question

What are you looking for in a career?

Here's a breakdown of best practices:

Core Principles

• Tailor to the Role: Your answer shouldn't be generic. Connect your career goals directly to the skills and tasks relevant to the investment banking internship and the firm.

• Honesty with Enthusiasm: Be genuine about what excites you in a career. Interviewers look for sincere interest, which leads to better engagement and long-term potential.

• Growth Mindset: Investment banking is about rapid learning and development. Emphasize your desire for challenges, taking on new responsibilities, and rapid advancement.

How to Structure Your Answer

1. Short-Term Focus:

   • "I'm seeking a fast-paced and intellectually stimulating environment where I can directly contribute to financial analysis and deal execution."

   • "I want to gain technical fluency in financial modeling, valuation methodologies, and the core principles of investment banking."

2. Mid-Term Development:

   • "I see myself developing the skills required to become a highly effective associate – taking on increased responsibility, client interaction, and project ownership."

   • "I want to participate in mentorship and training programs that will enhance my knowledge and skills within the industry."

3. Align with the Firm (Do Your Research!):

   • "I'm particularly drawn to [firm's name] because of its strong reputation in [mention a sector they excel in] and commitment to developing analysts into future leaders."

🗞 Industry News

🔥 Jobs Report Comes in Hot

On Friday, stocks ended on a high note as investors overcame their initial apprehensions after processing a robust monthly jobs report. However, there’s still some uncertainty regarding the Federal Reserve’s approach to interest rate cuts. The Dow Jones Industrial Average rose by about 0.8%, or 300 points, while the S&P 500 increased by 1.1% following its worst single-day drop since February. The Nasdaq also saw a 1.2% gain.

Despite these gains, all three major indexes experienced weekly losses as Wall Street’s interpretation of comments from central bank officials seemed to dampen confidence. The US labor market continued to perform well in March, with employers adding 303,000 jobs, significantly more than economists had predicted, and the unemployment rate fell back to 3.8%. Wage growth also met expectations. However, the market remains jittery, with investors balancing economic releases and corporate news against rising tensions in the Middle East. Oil prices remained near multi-month highs on Friday, contributing to concerns about potential inflation.

Read more about this story below.

Thanks for tuning in today! Best of luck to everyone working through recruiting right now. If you sign an offer, reply to this email and let us know about it! Like seriously, do it—we’d love to hear about it!