DCF Question - How long does it take to learn?

Quick question--how long does it take to learn dcf on your own? This is under the assumption that the person doesn't know the accounting behind it.

How long will it take to learn the accounting behind it + dcf itself? How many hours should I study per day if I want to know how to do it by the beginning of Feb?

Sorry if it seems like a stupid question, I just want to know how much time to devote to learning it before I start.

 
Best Response

Maybe an hour?

1) EBIT * (1 - tax rate) + D&A - CAPEX - Net increase in working capital = Current FCF

2) Pour through 10K/10Q to come up with fair assumptions of growth, and project FCF out 5 years; calculate terminal year growth rate w/ perpetuity growth model

3) Discount with WACC; WACC = cost of equity (from CAPM) * equity/(equity+debt) + cost of debt (interest on debt & market value of debt) * debt/(equity+debt) * (1 - tax rate).

Template: http://macabacus.com/valuation/dcf/overview SEC Filings: http://www.sec.gov/edgar/searchedgar/companysearch.html

 

[quote=BTbanker]Maybe an hour?

1) EBIT * (1 - tax rate) + D&A - CAPEX - Net increase in working capital = Current FCF

2) Pour through 10K/10Q to come up with fair assumptions of growth, and project FCF out 5 years; calculate terminal year growth rate w/ perpetuity growth model

3) Discount with WACC; WACC = cost of equity (from CAPM) * equity/(equity+debt) + cost of debt (interest on debt & market value of debt) * debt/(equity+debt) * (1 - tax rate).

Template: http://macabacus.com/valuation/dcf/overview SEC Filings: http://www.sec.gov/edgar/searchedgar/companysearch.html[/quote]

Judging from OP's post, I'm sure it's going to be more than that. OP, you might want to dedicate a week or two during your winter break to learn it.

One thing I must say is this though, if you haven't taken basic accounting class, you're going to try to remember the steps but won't really know what you're doing. Once you've taken the classes, you will have a clearer view and understanding for what you're doing. You can follow tutorials but if you don't know what you're doing, than it's just as bad as you wasting your time.

 

If you have good grasps of accounting/excel, a few days with the models and you'll be fine. They're really not that hard, but there are a lot of complex scenarios - of course, you can learn all this as they come up.

I found 3-statement modeling the hardest when I first started out since I didn't know what the fuck I was doing. Almost came when we linked them together no homo

 
DaisukiDaYo:
If you have good grasps of accounting/excel, a few days with the models and you'll be fine. They're really not that hard, but there are a lot of complex scenarios - of course, you can learn all this as they come up.

I found 3-statement modeling the hardest when I first started out since I didn't know what the fuck I was doing. Almost came when we linked them together no homo

Know that feel, man. I had absolutely 0 accounting knowledge when I started to really become interested in banking.

 

Ut repudiandae id facilis perspiciatis consequatur qui voluptatibus. Aut alias ducimus dolore id. Ipsum voluptas aliquam et voluptatibus omnis et. Dolores quia qui consequuntur tempore omnis amet nulla et.

Iure corrupti dolores provident dolorem ipsam debitis. Est numquam omnis et temporibus eius. Assumenda qui sed laboriosam ut omnis voluptas explicabo. Rerum quis maxime maxime autem. Est qui unde accusamus eius placeat.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
CompBanker's picture
CompBanker
98.9
6
dosk17's picture
dosk17
98.9
7
GameTheory's picture
GameTheory
98.9
8
DrApeman's picture
DrApeman
98.9
9
kanon's picture
kanon
98.9
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”