This web page will give you some ideas about how to deal with an amazingly dreadful thing that seems to be happening these days, where you are put in a room (a torture chamber) and you are given some instructions to complete a model. I cannot believe that you have to go through such hell to get a job and it makes me feel good to be an old man who has not had to go through such a hellish experience. So I am giving you some ideas if you have to go through such an experience. On this page, I have made a little exercise file for you to work through and I have also included a video in which I give you some ideas about how you can manage one of these horrible interviews without having a nervous breakdown.
Some Excel Basics for Your Interview
Don’t get too fancy with excel and by all means do not use my generic macros or read pdf or any tools. I doubt that you will be able to access the internet and download the files from your torture chamber. But you want to make sure you can operate in excel very quickly so that you can concentrate on the structure of the model and incorporate assumptions that they give you. So, here are some things you can do to make your excel go much faster. I love macros, but for the exercise and for your interview I do not think you should make any, it will waste time and probably reduce your score. A lot of people are anti-macro and don’t get to fancy with any macros.
Cut off the end of the sheet with SHIFT, CNTL, 0 and then you can SHIFT, CNTL, –> and after that press CNTL, R. Please try this and get really fast at it.
Learn how to select the entire sheet, press the F5 or CNTL, g and then de-select the text thing. Then you can colour inputs in the sheet. Get really fast at this.
The horrible people who made your test may not know this one, but use the EIS short-cut in different ways and do this at lightening speed.
Learn how to make time lines in seconds. Use the EDATE function and make sure the time line does not use complex formulas. You can see this in the video and you can
Fundamental Crimes Not to Commit in any Model
- Hard-coded numbers after assumptions in the model
- Not putting driving factors in the left column
- Putting the forecast of Profit and Loss and Balance Sheet at the beginning of the model
- No explicit debt and cash section that connects the financing with the balance sheet
- No historic switch and method to flexibly move from history to forecast
- Depreciation methods that do not recognize change in net deprecation rate with change in growth rates
- Formulas in the balance sheet rather than links to closing balance
- Meaningless colours that do not provide a guide
- No audit of balance sheet and history
- Polluting the fundamental models with multiple scenarios(keep scenarios on a separate page)
- Use of formulas that are too long (a life sentence crime)
- Use of too many different excel functions (other than LOOKUP, INDEX and AVERAGEIF)
- Formulas that are not the same across the column
The Basic Structure of Any Corporate Finance Model with Valuation
Keep it on one page first, you can switch the pages later.
Shitty Assumptions Made by People who Create the Model
Show Some Valuation Modelling Prowess
Use the XIRR
Compute project IRR (pre-tax) and Project IRR after tax to show you know the basic metrics
Make sure you put in a balanced balance sheet.
Hedieh’s 10 Commandments from the Old Testament
If You Are Still Nervous, Do Not Buy My Book; Instead Give Me a Ring on Skype