Bcg finance formulas

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Anonym B fragte am 18. Mär 2018

What are some common finance/math formulas that one might expect at a BCG interview? Will these be given if you don’t know them?

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Vlad
Experte
Content Creator
antwortete am 18. Mär 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

Here is a set of things you need to know:

1) Math and formulas:

  • Interest rates calculations
  • Compound margin
  • NPV using the Rule of 72, Perpetuity
  • CAGR using the Rule of 72
  • Currencies exchange calculations
  • Speed, time, distance calculations
  • Equations, systems of equations
  • Ratio & Proportions
  • Little's Law
  • Solving the problems by calculating the area of the triangle
  • Profit / breakeven formula
  • Correlations, outliers (being able to spot on the graphs, tables)

2) Fast math skills

  • Rounding up and down
  • Learn how to multiply double digit numbers (https://www.youtube.com/watch?v=6ndkkPZYJHo)
  • Learn the division table up to 1/11 (i.e. 5/6 = 83.3)
  • Learn how to work with zeros using powers (e.g.: 4000000 = 4*10ˆ6)

Use math tools (Mimir math for iOS), Math tool on Viktor Cheng website to practice

3) Working with tables and graphs and deriving conclusions

  • Study "Say it with Charts" book
  • Check all available MBB presentations and publications. Practice to derive conclusions and check yourself with the actual ones from the article / presentation
  • GMAT IR part (Official guide and Manhattan prep)
  • Learn basic statistics (Any GMAT or MBA prep guides)

Good luck!

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Francesco
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antwortete am 18. Mär 2018
#1 Expert for Coaching Sessions (3.600+) | 1.300+ Reviews with 100% Recommendation Rate | Ex BCG | 8+ Years of Coaching

Hi Anonymous,

these are the most common formulas I encountered/have been useful through my interview process at BCG:

  • Breakeven point
  • Rule of 72 (for quickly computation of compound rates)
  • Perpetuity formula (for quick valuation estimates) and general NPV formula

I would not expect any interviewer to provide any of them in case you don’t know (or if they provide I don’t think they would move you to the next round).

Besides that, you should also be familiar with simple and compound interest, and could be useful to be updated on the main currency exchanges, oil and gold prices.

Finally would recommend reviewing the formulas for volume/surface of main solid figures (pyramid, cone, cylinder, sphere), which could be useful in market sizing cases.

Best,

Francesco

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Andrea
Experte
Content Creator
antwortete am 25. Mär 2018
Former BCG Principal and decision round interviewer

Very interesting, for North America perspective I find requirements for financial knowledge to be wildly different from the ones outlined in other answers.

Unless you are an MBA, a finance major or worked in finance I do not expect any knowledge of the formulas - with the exception of NPV - and I will indeed explain the relevant formulas to you if needed. Also would never expect you to calculate the NPV of a series of cash-flows during an interview due to the computational heaviness of that.

Finally, the rule of 72 is a nice tool but if candidate uses it during the interview then I would ask the mathematical explanation behind it. If you don’t that would be detrimental. This because To be an excellent consultant is very important that you know and understand the tools that you use intimately and understand how they work, their limitations, etc.

What I do expect is that you ace the basics like multiplications and divisions. I know, it sounds, well, basic, but if you have an hesitation on telling me what is 2% of 5M or calculate 0.6/9 that would be almost a non starter.

Finally when we do math I would like to see if you can get to the results in the simplest and fastest way possible. This will show me whether in a case you are trying to complicate things uneccessarely.

hope it helps,

Andrea

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Anonym antwortete am 17. Jul 2020

Dear A,

Here is some finance formulas you need to know:

• Break-even Calculation = Fixed Cost / Contribution Margin; Fixed Cost / (Price – Variable Cost)

• Debt Ratio = Total Debt / Total Assets

• Debt-to-Equity Ratio = Total Debt / Total Equity

• Four Cs (marketing from a customer’s point of view): Convenience, Cost to the user, Communication, Customer needs and wants

• Four Ps (starting or expanding a business): Product, Price, Place, PromotionGross Profit = Sales – Cost of Goods Sold
Gross Profit Margin = Gross Profit / Total Revenue

• Profit = Total Revenue – Total Costs
• Return on Assets = Net Income / Total Assets
• Return on Equity = Net Income / Shareholder’s Equity
• Return on Investment = Net Income / Initial Investment
• SWOT Analysis: Strengths, Weaknesses, Opportunities, ThreatsTotals Costs = Fixed Costs + Variable Costs
• Total Revenue = Price x Volume

Hope it helps,

Best,

André

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Marco-Alexander
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bearbeitete eine Antwort am 5. Sep 2021
Former BCG | Case author for efellows book | Experience in 6 consultancies (Stern Stewart, Capgemini, KPMG, VW Con., Hor

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Astrid
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antwortete am 13. Aug 2018
PrepLounge Head of Product & Marketing
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Vlad

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McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School
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