What is the appropriate level of DCF knowledge for an IB summer internship?
Hi there,
I'm a rising junior at a target school with a good GPA. I'll be applying to internships for the summer of 2019 this summer and although I have my heart set of asset management and investing, I'll be applying for IB spots if asset management isn't an option. I have a bunch of investing-related activities on my resume, but under the technical skills section that most people include, I didn't have any noteworthy abilities outside of typical Microsoft Office stuff. I know modeling is a large part of IB, and I wanted to learn about DCF's so over the past week, I've reviewed the DCF sections of both the Vault guide and the more recent Rosenbaum and Pearl guide.
Although I understand all the formulas involved, all the logic, and the basic fundamentals behind DCF analysis, I'm having a hard time figuring out how to decipher the Excel sheet that comes with the Rosenbaum and Pearl book. I have to return to school in a few days, and it seems exceedingly difficult to figure out what the Excel sheet is talking about. I was wondering if it's totally necessary to understand how to build a DCF model from scratch in Excel in order to get one of these internships or if my level of knowledge right now is enough. Furthermore, I was wondering if this kind of more detailed modeling knowledge is necessary for an internship in asset management.Thanks a lot and sorry for the long question!
IMO you should be able to
1) Understand the logic of a DCF and which steps you would need to take in order to create one from scratch (this is something that is frequently asked in interviews). This includes the drivers of a DCF model and common pitfalls
2) Execute on this manual in a simplified manner. I don't think anyone expects you to be an excel god by the time you start your internship. However, you should have created at least 1-2 simple models in excel. By that i mean dont get worked up too much about which formula to use for convenience enhancing things, but rather focus on an intelligent layout that enables swift readability. Grab yourself any listed company and get stuck in. You will quickly gain pace and learn from your own mistakes.
3) Quickly analyze the DCF template that is usually given to you. You can practice by downloading Internet DCF templates from reputable sources and fill them out.
Hope that helps.
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