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Happy Thursday, future bankers!

Hope that recruiting has been going well for everyone! Today we’re going to be going over a company’s debt capacity, one word to describe yourself, and three major media giants teaming up for a landmark sports streaming deal.

🚀 Let’s get into it.

🔢 Technical Question

“What factors play a role in determining the debt capacity a company can sustain?”

When evaluating a company's debt capacity, three critical factors come into play:

1. Amount and Stability of Cash Flows: This is the cornerstone of debt repayment ability. Consistent and predictable cash flows – ideally exceeding the debt service requirements – provide the financial cushion for manageable borrowing. Cyclical businesses with volatile cash flows face higher uncertainty, potentially limiting their debt capacity.

2. Conditions of Financing Markets: Interest rates, loan terms, and availability of lenders significantly impact debt capacity. Favorable lending conditions with low interest rates and flexible terms can expand borrowing potential, while tight credit markets might necessitate lower leverage. Understanding current market conditions and their impact on borrowing costs is crucial.

3. Availability of Assets for Security: Collateral plays a role in securing loans and reducing lender risk. Companies with valuable assets, particularly those easily liquidated, can access larger loans at better terms. Conversely, those with intangible assets or limited collateral might face stricter borrowing limitations.

Building on these points:

• Quantify: Go beyond just mentioning "amount" of cash flow. Briefly explain metrics like EBITDA or debt service coverage ratio for a quantitative perspective.

• Connect the dots: Briefly explain how each factor interplays with the others. For example, stable cash flow allows for more flexible loan terms, and valuable assets can offset risk in volatile markets.

• Industry considerations: Briefly mention how these factors might differ by industry. For example, growth companies might prioritize higher leverage for expansion, while established firms might focus on maintaining a conservative debt profile.

🗣 Behavioral Question

"What is the one word that your friends would use to describe you?"

Here's how to tackle the "one-word description" question in your investment banking internship interview:

1. Choose a positive and relevant word:

• Pick a word that showcases a strength valuable in investment banking, like "driven," "analytical," "collaborative," or "adaptable."

• Avoid generic adjectives like "friendly" or "outgoing" unless you can tie them to specific situations demonstrating relevant skills.

2. Explain the "why" with real-life examples:

• Don't just state the word; explain why your friends would use it and provide genuine examples from your life that illustrate that quality.

• Be specific and avoid clichés. Focus on actions and outcomes that showcase your skills and impact.

3. Connect it to investment banking:

• Briefly explain how the chosen word translates into your potential as an investment banking intern.

• Show how this quality would benefit you and the team in the specific internship role.

Example Response:

"If I had to choose one word my friends would use to describe me, it would be 'tenacious.' They wouldn't say it because I'm stubborn, but rather because I have a relentless pursuit of understanding and achieving goals. When I set my mind to something, I put in the effort, research, and persistence to see it through. For example, last year, I was determined to learn a new programming language for a personal project. Despite initial challenges and frustration, I spent extra hours practicing, sought help from online communities, and ultimately mastered the language, even exceeding my initial goal. This tenacity extends to my academic pursuits and extracurricular activities. I believe it translates directly to investment banking, where complex analyses and meticulous attention to detail are crucial. My determination to learn, overcome challenges, and achieve results would make me a valuable asset to your team."

Key points:

• Be honest, say what your friends would really say about you.

• Positive and relevant word ("tenacious").

• Real-life example demonstrating the quality.

• Connection to the internship and its requirements.

By following these tips and choosing a word that resonates with you, you can deliver a compelling response that highlights your strengths and potential for success in the investment banking field.

🗞 Industry News

Media Companies Team Up for Sports Streaming 🏀

Three major media companies, ESPN, Fox, and Warner Bros. Discovery, are joining forces to launch a new sports streaming platform in the fall. This one-stop app will offer content from at least 15 networks, including all four major professional sports leagues, college sports, and international events like the FIFA World Cup. This move aims to provide sports fans with a wider range of content at a potentially lower cost compared to subscribing to multiple services.

The platform will feature offerings from popular networks like ESPN, FOX, TNT, and TBS, covering sports like NFL, NBA, MLB, NHL, and more. Additionally, subscribers might have the option to bundle this service with Disney+, Hulu, and/or Max. Industry experts believe this collaboration is driven by the upcoming NBA rights renewal negotiations and the increasing competition from tech giants like Google, Amazon, and Netflix. This joint venture marks a significant step in the media landscape, offering a convenient and potentially cost-effective option for sports fans seeking diverse live and on-demand content.

Read more about this story below.