Financial Modeling Practice
Hey guys,
I'm going to be an SA at a Semi-BB this summer. That withstanding, I want to get some practice with financial modeling. I am a non-target and want to hit the ground running, and feel this can be more easily achieved if my modeling skills are simply better than other analysts.
Outside of the WS Prep, are there any books/CDs/etc. that you would recommend that would provide me with a solid foundation in building models from scratch? Admittedly I would like to avoid the WS Prep because, as a college student, I am fairly broke and would like to spend 100-150 max.
Thanks for any help you can provide!
Nothing will teach you to model like having a bunch of analysts breathing down your neck and showing you what to do. Even if you have modeling experience its not a given that there will be modeling for you to do. Presentations, comps, research, these things are what you will spend more of your time doing.
Personally, I do not recommend any of the training courses to anyone outside of whatever your firm gives you. I think they are overpriced, and you can learn on the job much more effectively.
You are taking a big risk if you don't have good skill sets at a bank or firm these days. Having Analysts breathing down your neck will possibly cost you your job. Anyone who says differently is full of it. Nobody wants to waste their time teaching everything to a new hire (been there - don't like it). The big firms have in house training programs. Those who set themselves apart during these sessions from the group as being more capable will in fact reach higher levels in the firms quicker. If you want to be "top dog," "rookie of the year," or in line for top dog you need strong skills upon hire. That makes a very good impression and elevates the groups quality from the get go. Banks and firms like this very much! I suggest staying away from take home courses. These can lead to bad habits and worse models. This can also cost you your job. I took DealMaven and The Analyst Exchange. DealMaven didn't help much, but The Analyst Exchange was amazing. I am now the go to guy in my office for all modeling related questions. Needless to say, that was not the case before I took the program. Consider taking a program before you fall behind the group!
I would take everything JackSteven says with a huge grain of salt. He is obviously an Analyst Exchange troll.
The fact that you are taking the initiative to learn these skills prior to joining speaks volumes about your character and work ethic. Obviously, preparedness and hard work are crucial to success and Jack is correct in emphasizing the fact that a headstart will put you ahead of the pack. At the same time, despite what Jack says, the best way to learn modeling and all of the valuation techniques that you will lose is in fact on the job training (i.e. analysts breathing down your neck).
I would recommend you do the following before starting:
1) Become extremely comfortable with excel (basic stuff like formatting, calculations, etc) The modeling aspect is quite easy if you have a solid grasp of excel and a sufficient understanding of the links amongst the various financial statements
2) Become proficient in Powerpoint as you will be doing a lot of formatting of presentations
3) Get a new, used, or borrowed version of SCOOPBooks "The Practitioner's Guide to Investment Banking - Mergers & Acquisitions and Corporate Finance"
Other than that just stay apprised of current market development and economy at large. If you go in there with a positive attitude and a desire to work hard you should be fine. Don't forget that the most important aspect of banking is relationship building so be sure to hang with the fellas any and everytime they invite you out. Good luck.
congrats on the job!
as far as learning modeling goes. i found it helped a ton to get other peoples models and use a random set of financials to use in the model. i used this website: http://www.exinfm.com/free_spreadsheets.html to learn a good bit before starting my position i would recommend #45 and #79. #79 was created by a couple professors at Colorado and has lots of notes to guide you. once you understand it, use #45 to incorporate a transaction, in this case a LBO. Working through them also gives you good ideas to help format your own models. Once you feel like you have a good handle on how each of the models work try building your own. Keep it simple and focus on each part of the LBO example.
You also might be able to get your contact at the firm to send you a basic model to "get familiar with the tools you are going to be using day to day."
Fantastic stuff lager44!
How to Practice Modeling (Originally Posted: 03/22/2013)
I am currently attempting to practice my modeling due to the skill's importance when attempting to lateral. The thing is I am having trouble tackling all of the different one-off scenarios as well as checking my work.
Does anyone know of a site that has compiled 3 statement and DCF models against which I can check my work, or any general modeling advice?
My main stumbling point is when I encounter line items in companies' statements that I haven't seen before. Say, redeemable interest or deferred taxes on the B/S. Do you roll these into other accounts or keep them broken out separate?
It seems like you need to have modeling skills to break into an IB but it appears to be extremely difficult to develop those skills without a BB training program. Does anyone have any pointers? ty.
Rosenbaum investment banking is the best book that I have found that has successfully put it all together. It guides thorough the entire process and has a real example.
http://www.amazon.com/Investment-Banking-Valuation-Leveraged-Acquisitio…
You can also try Damodaran's site. That's useful as well
http://pages.stern.nyu.edu/~adamodar/
rosenbaum and pearl book is probably the best resource
macabacus is also great
To answer your question on what to do with random assets on the balance sheet...
If you think they are more or less immaterial, then roll them all into a single "All Other Assets" line, then flat-line it into the future.
Alternatively, you can build those random assets/liabilities similar to your usual working capital items. Make the changes flow to the cash flow statement - just make sure you know if they are CFFO, CFFI, or CFFF items.
Could anyone who has done both (CountryUnderdog?) comment on whether it is worthwhile doing the BIWS advanced modelling course prior to an SA stint? I've read Pearl & Rosenbaum, gone through BIWS fundamentals, and can put together basic DCF and comps but know I'm skipping over a number of exceptions and special situations.
Alternatively I was considering asking the most prominent questions to an analyst I'm friendly with in the group I'll be in and leaving the rest for the summer. If I was going to choose one or the other, would the powerpoint or advanced modelling course be more useful?
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