Modelling Questions in ER Junior Associate Roles?

Was wondering what kind of questions related to modelling would one expect when interviewing for an ER Junior Associate Role (i.e. one step below associate)?

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Best Response

Hey "Balla" - know your income statement, cash flows and balance sheet. A forth sheet for most analysts consists of a "revenue model" - IE what drives the top line of your income statement. Obviously units (volume) and pricing. For companies with multiple product lines, one could break this out by product line. Personally I've found that the DCF is more of an academic exercise, although you could get a question about underlying assumptions in a DCF (terminal growth rate, WACC, etc.) Know that P/E and EV/EBITDA are the two dominant valuation metrics for nearly all companies that are profitable. The DDM (dividend discount model), to me, is a joke, but maybe that's b/c most of my companies don't pay a dividend. That said, I can't imagine that analysts derive price targets using a DDM model, unless it's one of many ways of arriving at a price target. Good luck!

 

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