13 Comments
 

Be able to produce a DCF and 3 statement with insightful revenue build/margin bridges to highlight cost drivers. Might need to calculate specific ratios too.

nothing particularly tricky or hard, just be able to do it relatively quickly using the resources they give you (public disclosures etc)

 
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I will let the forum tell me if i'm wrong but I wouldn't build a full 3 statement model (unless it's explicitly asked). 

Since it's likely there will be a 1-hour debriefing after this test, I would spend most of my time on building revenue/cost breakup as granular as possible, understanding the drivers and the key debate of the stock. 

So very quick DCF, B/S and CFS. Very granular Unit Economics, I/S and write-up.

The biggest mistake would be to come up with a perfect 3-statement but no idea about what the business actually is. 

 

A lot of the time, the company will have some way of disclosing this. Price, volume, fx, scope is a big one, ASP x Units sold is another. They also can disclose bridges for you to use in forecasting. Just read the footnotes and disclosures to know what each is referring to.

 

My question is always

  • how can I get a thoughtful growth ALGORITHM in the time given. This means understand what the recurring driver is (volume at GDP, GDP- = some function of Tam tailwind and idio share gain? price at inflation vs real? tailwinds to overlay?


  • The REAL question is how the hell to figure that out from filings without foreknowledge of the business. Curious for wiser apes to chime in 
 

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