Hi! I am a management consultant interviewing with a large cap fund based in London. My first round is on Friday and will be a modeling test. The headhunter gave me hints about the content and what the sections will be this morning. While most of it seems straightforward / similar to what I have seen in test examples, she mentioned a contribution analysis (details below). Can anyone explain how this works in the model pragmatically?
Details:
HH mentioned there will be a contribution analysis that helps bridge from 2022 EBITDA to 2027 EBITDA with the following steps: 2022 EBITDA > change in sales > margin expansion > increased operating expenses > 2027 EBITDA
My understanding is this analysis helps understand how the company is expected to create value during the holding period: 1) increasing topline through volume/price increase, 2) growing gross margin through COGS reduction, 3) growing EBITDA margin through lower sg&a and other operating expenses
If you have any examples of how this works, it would be super helpful to visualize!
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