Citadel FCAT test

Based on the most helpful WSO content, the Citadel FCAT test typically involves a 3-statement modeling exercise. Here are some key takeaways from similar Citadel case studies and modeling tests:

1. Time Management: You may not have enough time to build a full 3-statement model. Focus on creating a robust income statement with thoughtful revenue and cost builds. Prioritize understanding the business and identifying key drivers, risks, and opportunities.

2. Simplify Assumptions: Avoid overcomplicating. For example, instead of building detailed schedules (like PP&E or working capital), you can assume percentages of sales or use adjusted numbers.

3. Key Focus Areas:

   • Revenue and cost drivers (e.g., unit/price builds, incremental margins).
   • P/E multiples or other valuation metrics.
   • Seasonality and fluctuations in quarterly results.
   • Dummy lines for FX or other external factors if relevant.

4. Discussion and Defense: After building the model, you’ll likely need to present your findings, defend your assumptions, and provide a recommendation. Be prepared to discuss the business's key issues, risks, and upside/downside drivers.

5. Resources Provided: Expect to work with public filings, earnings transcripts, and possibly peer data. You may not have access to databases like CapIQ or equity research reports.

6. Granularity: Keep it practical. For example, depreciation and amortization can be assumed as a percentage of revenue rather than detailed schedules.

If you're preparing, practice building concise models under time constraints and focus on articulating your thought process clearly. Good luck!

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