3 statement modelling test for IBD SA


I have an upcoming superday with an M&A boutique. Part of it involves making a 3-statement Excel model in 1 hour using some given assumptions. My background is finance but ive never made a 3-statement model using Excel before. Does anyone have any advice on what i should focus on learning/studying?

Also, can i expect some additional elements like debt-schedule/LBO or are they not likely to expect that much for just an intern role?

Thanks guys

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Comments (15)

Dec 3, 2018 - 5:50am

Unfortunately the email I got from the VP was rather vague ("We need you to compile a 3 statement model in about an hour using given assumptions"). But if so, then I will assume that no debt-scheduling or additional analysis is required...

Sorry, but what do you mean by "unless it's a very simple model that doesn't need to align with actual financial statements"?

Dec 6, 2018 - 4:53am

My guess is that you will be asked to assume some key ratios such as sales increase, gross profit rate, etc., without having to dig into the business and extract operating information like how it's done in hedge funds, because otherwise it would be weeks' workload.

By that, I mean your financial model may not align with historical financial statements. For example, if you find that when you plug the numbers in 2015 balance sheet and 2015 income statement into your cash flow model of indirect method, the net change in cash might be different from that in the actual cash flow statement. I don't know if that's a common problem in US, but it's like happening all the time in HK.

Dec 3, 2018 - 6:39am

Crack open some financials and practise. I would imagine that seeming as its for a SA position the test will either be simpler than you imagine or you will not be expected to finish and its about seeing how far you can progress it.

I would imagine you will be given a very simple balance sheet, p and l and then tasked with simple assumptions e.g debt held constant etc to forecast and they are more interested with your understand of how the models link together basic accounting and then probably some analysis of the model once completed.

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Dec 3, 2018 - 9:39am

I suggest cleaning up your excel skills as well. From now until your superday (and afterwards) try using just the keyboard in excel and learn various hotkeys to make yourself more efficient. You'd be surprised how much easier it is to build a model when you can work quickly in excel. Start with using Alt as your navigation tool through the ribbon and then learn various hotkeys like Ctrl + b to make something bold. Best of luck to you.

Dec 4, 2018 - 11:52am

Use multipleexpansion.com and macabacus.com to practice 3-statement models. Don't spend time learning short cuts and hot keys. Make sure you understand the fundamentals of a three statement model rather than memorizing what links to where etc.

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