how comfortable should I be with accounting/valuation concepts?
Hi all.
I am currently heading into my fourth week as a SA in a regional M&A boutique. I'm not gonna lie I got this job through connections and was not tested in technical stuff. I have good grades (3.65 gpa) in a semi-target and have always gotten A or A- in accounting/finance classes including higher level ones like Investments and Fixed Income Sec. They've been nice enough to let me start doing valuations for some companies, and while I've obviously managed to get the DCF running, I have a hard time with fully grasping and remembering the material. I still get confused with concepts like working capital and often forget simple formulae/forget the meaning of some items in the formula. Some of the uncommon line items in firm's financial statements were truly foreign to me. I didn't even know coming into the job that you had to include ERP and country risk premium or the importance of unlevered beta to the WACC's calculation. I am slow on everything I do, including making slides or simple comps and precedents because i get nervous and want to check everything excessively.
All of this has made me wonder if I am truly fit to work in this industry/sell-side in general. Am i stressing/expecting too much out of myself or is this not for me? How comfortable should I be with accounting/valuation concepts? Should I be able to forecast stuff such as the effect of tax benefits and additional CAPEX/depreciation from a new plant, or is it normal to struggle?
Thanks a lot in advance. Open to any and all sorts of criticism.
Normal to struggle but you should be inquiring about all these confusions either through online or if you have a coworker who is willing to help. Some of the concepts you listed are pretty basic too in the modeling world so if I were you I’d try taking a separate online course during your internship
A bit late into the internship for the modeling courses though. Also I realized I was a bit slow compared to FT but I doubt any interns hit the ground running unless they’re truly top 1% type hardo who already had a couple of summers in finance/grew up around it.
I did purchase the WSP full course before hand but didn’t retain everything. Tried looking back at it in my free time but that’s very scarce due to the insane work schedule.
what would you say worked best for you to retain information? Is it really just repetition or is there some sort of curriculum/course out there that makes life easier?
Hey man don't be hard on yourself. Take a supplementary course on what each accounting and valuation term means technically and at a 3rd grade level. Over time you'll understand this stuff through reps. GL.
don’t worry, you can’t be any worse than MBA associates
I know everyone talks about how much they grind on this stuff out there, but you're only a summer analyst. Keep an open mind, read up on the concepts you're struggling with, and you'll start to understand them intimately in time. I studied finance in school and when I hit the desk I still didn't understand the applications well until after I got real reps in. Happy to say I've been a top performer over 6 years in IB and PE but if you asked me how I felt during my summer analyst years I would've felt lost. Just keep putting in the effort, you're not expected to know everything all at once.
Fine to be lost as a summer because nobody will rely on him/her for any technical stuff - it doesn’t reflect on his mental capacity but more a lack of preparation so I would get my shit together and lean the accounting and valuation asap.
You can always ask questions but tbh if an analyst asked me sth basic like what equity risk premium or NWC are I would straight assume they have no technical skills and avoid giving them anything technical, it will also not help your reviews
not hating bro but 3.65 is not considered a good gpa is finance
You are doing nothing but hating here
Come on bud, you have no idea how his Gen Eds went, not clue whether he had family or personal issues. You're commenting on this post completely ignoring the fact that it was clearly good enough to get him an SA position.
no dude im not discounting his efforts or whatever shit that he got going on. just wanted to let him know that 3.65 is objectively not considered a good gpa in this industry in case he wants to lateral somewhere else early in his career or even participate in PE recruiting so he knows he needs to up his grades if needed
I made it to a $10bn+ fund with a 3.5 GPA, people don't care if you prove you're competent. Grades only show how good you are are at school.
yea but my point is its easier when you have a higher gpa. why make it tougher on yourself when you can control it pretty easily with some effort and hard work (considering everything is normal and you're not going through some extraneous circumstances). kudos to your achievements though
What I've done to memorize the material (or have something to look back on) is to carry a notebook in my bag that has all of the equations for every input in each financial model. Like how to calculate UFCF then EV is on there, how to do nopat -> ropi is on there, etc. This helps a lot and there's really no share (in my opinion) of double checking that stuff throughout your work
No one expects you to know very much as a summer analyst. Don't be worried about the time it takes to complete tasks either. You are an extra resource and you are not crucial to the team in any way (if you are the bottleneck as an intern, your team has no idea what they're doing). With that said, take your time and make sure tasks are completed correctly. Completing tasks quickly with plenty of mistakes will make your team really pissed off. Meanwhile, completing your tasks really well will make them happy with your performance.
Completely normal to not be comfortable with technicals as an intern. At my bank, interns only do comps when it comes to technicals. Have never seen a case where an intern was expected to forecast tax benefits or similar. I'm at a US BB so might be different at a smaller boutique.
I wouldn’t be so soft. Interns are judged and they do need to win a return offer
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