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?
| +27 | James Fishback | 10 | 6h |
| +21 | Future of L/S | 5 | 3d |
| +17 | Latest blow up / wind down | 25 | 3d |
| +12 | Looking for Fund to Partner With - LMM Activist | 4 | 23h |
| +10 | SM L/S Compensation? | 3 | 1d |
| +9 | Moving from credit to equity? | 3 | 5d |
| +9 | MMHF Central Execution Trajectory/Advice | 1 | 2d |
| +9 | How to prep for credit HF? | 4 | 1d |
| +4 | Jensen Huang | 1 | 17h |
| +3 | Chefs at Pod Shops | 2 | 3d |
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
Illo voluptates quo et ea necessitatibus et. Voluptatem et odit porro aspernatur aut illo. Sed excepturi voluptatibus amet error. Unde est eos eum voluptates expedita sed ratione. Eius eaque voluptatem autem sint. Iusto aperiam omnis laudantium eligendi sed commodi.
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...