All,
Next week I have a 5 hour in person case study for a credit HF. I have been prepping and I have 2 questions, will I need to build out quarterly or annual forecasts?
And for quarterly, for a heavy seasonal business, how do you project working cap? Just as a % of revenue based on previous year?
P.S. do you usually get an excel file with the historical financials?
| +113 | Best SM seats in 2024? | 84 | 1m | |
| +93 | If and when to move to a pod? | 28 | 7h | |
| +72 | Pod Shop Regret | 24 | 2d | |
| +31 | Intellectual Caliber of People in HF | 32 | 2s | |
| +23 | Understanding pod shop leverage & cash usage | 2 | 3d | |
| +18 | UPenn SEAS vs Cornell Engineering | 7 | 9h | |
| +16 | SM Career Trajectory | 5 | 1d | |
| +15 | PMs: move across platforms, latest terms | 15 | 14h | |
| +9 | Alta Fox - How did Connor Haley do it? | 13 | 1m | |
| +9 | How to show track record to recruiters? | 8 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
For a credit HF I would have last 3 historical years, LTM, and then project out eight quarters. The idea is to quickly determine if it is a leveraging or deleveraging situation and how cash flow / liquidity evolves. Project working capital using DSO/DPO/DIO historicals, but if w/c is a material part of what is happening with liquidity at any given time build yourself in some ability to sensitize for stretching or contracting of vendor/customer terms etc.
I guess what's not super clear to me on NWC is how in a quarterly forecast you treat DSO etc. Take a building material distribution business, where they stock up until May and then destock. Huge intra year swings. How do I model that with days? Just extrapolate the previous year days and tweak up/down according to my assumptions?
And by previous year I mean, the same quarter in the previous fiscal year
Yeah why not? It takes less than 5 minutes to grab quarterly rev, cogs, AR, inven, and AP over a three year period. Just use the trend for each quarter and adjust as needed
Nihil porro voluptas enim ut officiis quo. Velit dolorem adipisci exercitationem totam accusantium quis. Expedita quos explicabo aperiam nobis expedita dolores.
Dolor aut veritatis architecto dolorum blanditiis sed qui. Ducimus quia deserunt quia explicabo totam blanditiis iure qui.
Doloribus numquam ipsum eum natus. Dolor nulla alias qui neque corrupti. Aperiam deserunt aperiam rerum. Impedit adipisci modi natus beatae optio provident. Ipsam facilis commodi est et est est.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...