Citadel FCAT

Based on the most helpful WSO content, here's what you need to know about preparing for Citadel's FCAT (Fundamental Competency Assessment Test):

1. 3-Statement Model Expectations:

   • The test typically involves building a 3-statement model, but the level of detail can vary. While you may not need to create additional schedules like a full PPE schedule, you should focus on:
     • A robust income statement with thoughtful revenue and cost builds.
     • A basic balance sheet with working capital items forecasted as a percentage of sales.
     • A cash flow statement that ties back to the income statement and balance sheet.

2. Key Ratios to Know:

   • Be familiar with profitability ratios (e.g., gross margin, operating margin, net margin).
   • Understand liquidity ratios (e.g., current ratio, quick ratio).
   • Know leverage ratios (e.g., debt-to-equity, interest coverage).
   • Be prepared to discuss valuation multiples like P/E, EV/EBITDA, and EV/Revenue.

3. Time Management:

   • Time is a critical factor. Prioritize building a functional and accurate model over making it perfect. For example, you might skip detailed reconciliations or formatting to focus on the core drivers and assumptions.

4. Assumptions and Drivers:

   • Be ready to justify your assumptions. For instance, use unit/price builds or tie costs to drivers like employees, store count, or other relevant metrics.
   • Incorporate seasonality or industry-specific factors if applicable.

5. Discussion and Defense:

   • After building the model, you’ll likely need to present your findings and defend your assumptions. This includes identifying key risks, upside/downside drivers, and potential areas for further research.

6. Additional Tips:

   • Avoid overcomplicating the model. For example, instead of detailed schedules, use adjusted numbers or placeholders for items like FX or reconciliation adjustments.
   • If provided with public filings or earnings transcripts, focus on extracting the most relevant data quickly.

By focusing on these areas, you’ll be well-prepared to tackle the FCAT and demonstrate both your technical skills and business acumen. Good luck!

Sources: Citadel (Surveyor) Case Study/Modeling Test, REPE Entity level investment