Physical Trading House - Excel Test

Hi guys,

I'm interviewing with a large physical trading house (think Glencore), and pretty much cruised through their 1st 3 rounds. However I could be possibly stumped on the next stage, which is basically a 1 hour "Analytical Excel Test".

To be honest, I have no idea how this bit pertains as the graduate program I applied for was a 2 year general, rotational based one where you eventually passed out as an Associate in Hard Commodities. The only slight inkling I have would be that they snuck in an extra interview round for me to speak with the Asset Origination Head, and for some reason he was very keen to explain in-depth, his department's structure and the kind of work they did in the firm. Thus, it could be something related to NPV/IRR maybe?

Have tried to ask the HR for some clues but got zero useful responses. Hence, does anyone out there have any idea what kind of test this would be? Will it be just building a simple 3 statement or something much more complicated than that?

Also, in physical trading, what kind of models are used often?

Thanks!

 

Could not see the relevance of a 3 statement model unless you were interviewing for their investment team which is more of an IB-exit op type gig - point being, I doubt that's what it is, but that could be it just so they can see how comfortable you are in Excel.

The nature of the things that I do in Excel at work would be hard to conduct a "test" for unless it was something along the lines of "build a table with this formula and index match-match the values from this list". At least in my group, Excel work tends to be putting something together that a trader wants to see represented a certain way which is obviously different than something that's by and large formulaic like a 3 statement model.

 

As I recall in the prior round, all 3 interviewers did allude to some form of financial modelling as all asked about my comfort with building models, especially in regards to cashflow, during the 1-1 interviews.

It was puzzling then because unless they intended to put me into a M&A kind of role (which I highly doubt since I have 0 IB exp), I really didn't see the relevance of financial modelling in a physical trading program.

Thanks though for your input, and I will try to brush up on my data manipulating skills.

 

I interviewed for an ops position at a PE firm once that had you do an Excel test that was pretty weird. You had a bunch of random data and had to answer some questions about it: mean, median... present it a certain way, present some findings from it...

I'm guessing they wanted to know how efficiently you could do it all. They probably checked to see the formulas you used and all that jazz.

I had just gotten into grad school and didn't care about the interview at all so I'm afraid I didn't hear much from them after that.

You might get something along those lines? Who knows, an hour is a long time.

 
Best Response

Don’t take my word for it, but given the information you provided in your first post, here is what I think they could ask you:

Since you mention origination, I would go more towards the valuation/analysis side of things instead of VBA-type stuff. Operationally, and given the time constraint you will have for the test, they probably want you to be able to extract data from csv files, do pivot tables, grab the stuff you need and analyse the crap out of the data. If they want to be annoying/demanding, they might want you to throw an extra model in there after extracting and parsing the data… My guess is, they will ask you a question hovering around “How much of xyz can we extract/produce from this source and sell without getting hammered; what will be the risk of it and what our optionality will be given different price scenarios. Here is some data, figure it out. You’ve got xyz hours.” If it comes to that, here is a link with a bunch of simple real option models. I think the second to last one on the list is the one you would want to take a look at.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/spreadsh.htm#optincf

I hope this helps & good luck.

 

So thanks again to all, for the help.

I've sat for the test and alot of it was very unexpected. personally, I was caught out in the cold as well since the test was very focused on modelling financing cashflow, instead of projecting earnings or valuing a source for investments.

Hope this helps whoever is going for a similar test!

 

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