By Arkady Libman, Managing Director, Wall Street Prep
Last month, we published a quick guide to answering most frequently asked
accounting questions during the finance interviews, and in this issue are sharing our thoughts on how to answer valuation questions, which make up the meat of the technical questions students can be expected to answer. Stay tuned for M&A help coming next week!
By Arkady Libman, Managing Director, Wall Street Prep
With the start of a new academic year, we know that finance interviews are again at the forefront of many of your minds. Over the next few months, we’ll be publishing most frequently asked technical finance interview questions and answers across a variety of topics – accounting (in this issue), valuation, corporate finance – to get you prepared.
Requisite plug here: If you are in immediate need of complete help, visit our finance interview prep page, for details on enrolling in prep videos and interview guides. Now without further ado….
COMMON FINANCE INTERVIEW QUESTIONS (AND ANSWERS)
Before we get to accounting questions, here are some interview best practices to keep in mind when getting ready for the big day.
Q: I was just told its common in the software industry to exclude stock-basedcomp from EPS (effectively treating it as a non-recurring item). Any ideas on this theory? It won’t affect a DCF but I don’t understand the rationale. Perhaps you add it back and then adjust shares?
A: Here’s how I think about it. Stock options are a form of employee compensation and a transfer of value from the current equity owners to employees. Presumably employees much prefer $50k + options over $50k. I think we can all agree that this transfer needs to be captured somewhere but the question is how?
Posted in Financial Modeling
Tagged EBITDA, EPS, financial modeling, options, stock based compensation
Q:As I was adjusting the calculation for SG&A in cell G38 I got a different margin to subtract (0.0028) and I should get 0.0044 according to the solution spreadsheet. Could I please see the detailed calculation of 0.0044 margin.
A: Here is the calculation:
Q: I want to learn Financial Modelling through an online delivered course. I am based in Australia so cannot attend for course physically in US. Do you provide online courses for overseas applicants? please advise,
A: Thank you for your inquiry. The Premium Package comes as physical manuals, along with a CD containing the model templates and supporting documents. Shipping to Australia takes anywhere from 3 days to 10 days, depending on the shipping option you choose when checking out.
In addition, if you select the video option, you are able to view and begin the program instantly upon enrollment. The videos include high quality streaming presentations where you see the manuals being presented online, alongside a video of an instructor working through the Excel models per the manuals.
Complete details about the Premium Package can be found at http://www.wallstreetprep.com/programs/self_study/premium_package.php.
We also offer a purely online version of the Premium Package with no physical materials at http://www.wallstreetprep.com/programs/onlinemodules.php but we recommend the hybrid videos/physical material version of the program for a richer experience.
Please let me know if you have any questions.
By: Jesse Milligan
I’d like to talk about using data tables for performing a sensitivity analysis in Excel. A financial model is a great way to assess a business’s performance on both a historical and projected basis. It provides a way for the analyst to organize a business’s operations and analyze the results in both a time-series (measuring the company’s performance against itself over time) and cross-sectional (measuring the company’s performance against industry peers) format. Continue reading
Posted in Financial Modeling
Tagged data tables, financial modeling, sensitivity analysis
By: Jesse Milligan
In a prior post, I discussed scenario analysis using the OFFSET function. Today I would like to introduce you to two useful formulas, the “Index” and “Match” functions, which can actually be combined to create an even more useful “super” formula if you will. This formula can be used in place of the commonly used HLOOKUP and VLOOKUP functions in financial modeling, and is most useful when looking at information related to things such as “comps” tables or sensitivity analysis. Continue reading
By Jesse Milligan
In our last article, we discussed the importance of formatting and having a dynamic set of projections in your financial model. We would like to take the concept of a dynamic model one-step further and introduce you to an additional important concept in modeling, which is the scenario manager. Continue reading
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