BAM Model Test

Based on the most helpful WSO content, for a 30-45 minute modeling test, you are likely to encounter a simplified version of a 3-statement model, DCF, or even a paper LBO depending on the role and firm. Here's what you should focus on:

Likely Models:

1. 3-Statement Model:

   • You might be asked to link the income statement, balance sheet, and cash flow statement.
   • Pay attention to how changes in one statement flow through to the others (e.g., depreciation, working capital changes).

2. DCF (Discounted Cash Flow):

   • Expect to calculate free cash flows and discount them using a given WACC.
   • Terminal value calculations (Gordon Growth or Exit Multiple) might be included.

3. Paper LBO:

   • A quick back-of-the-envelope LBO model focusing on IRR, debt paydown, and equity returns.

Ratios to Know:

• Profitability Ratios: Gross Margin, EBITDA Margin, Net Income Margin.
• Leverage Ratios: Debt/Equity, Debt/EBITDA.
• Liquidity Ratios: Current Ratio, Quick Ratio.
• Efficiency Ratios: Asset Turnover, Inventory Turnover.

Tips:

• Time Management: With only 30-45 minutes, focus on accuracy and simplicity. Don’t overcomplicate the model.
• Excel Shortcuts: Brush up on key shortcuts to save time.
• Practice Templates: Use the 27 financial modeling templates available in the WSO swipe file to practice.
• Key Assumptions: Ensure your assumptions are logical and clearly stated.
• Check Your Work: Allocate a few minutes to review for errors.

Good luck with your test—crush it like a pro!

Sources: 7 Practical Buyside Recruiting Tips for IBD Analysts, Q&A: 2nd year BA/A/AC at MBB going to UMM/MF in 2020, https://www.wallstreetoasis.com/forum/investment-banking/which-de-ratio-should-i-use-on-a-3-year-projection-of-the-following?customgpt=1, Bank of America Online Assessment Test and Application Process, On cycle Modeling Test Difficulty