How In-Depth Should an Interview DCF Be

Hey all - have been spending a few months building financial models in preparation for applying to PE firms. Coming from a consulting background, so I really haven't gotten that exposure before. For modeling tests and case interviews, how in-depth do you recommend going for building a DCF (or even a 3-statement model)? I'm assuming most of these would be 1-3 hours, so I do I need a sensitivity table, debt schedule, tax schedule, etc.?

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If you're interviewing for PE, I doubt you will be asked a single question related to DCFs.

Review three-statement models and learn how to build a three-statement LBO.

"My name's Ralph Cox, and I'm from where ever's not gonna get me hit"
 
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Find a few practice models online. Doesn't need to be super in-depth, I would recommend the following:

  • Income statement with some form of a revenue build (could be as simple as price/volume build or more complicated as you see fit or the situation requires)
  • Cash flow statement (keep it simple - Net Income, D&A, change in NWC, Capex, maybe one or two other items as you see fit)
  • Debt schedule (again, try and keep it simple - have a revolver and term loan)
  • Balance sheet
  • Returns (at the bottom of the sheet)

https://multipleexpansion.com/2017/08/31/Training-LBO/  good example to use. Slightly more complicated having a few tranches of debt, otherwise is very simple.

"My name's Ralph Cox, and I'm from where ever's not gonna get me hit"
 

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