Basic Tips and Formulas for Financial Question

financial analysis M&A Case Net Present Value
New answer on Apr 30, 2020
7 Answers
815 Views
Leonie asked on Feb 26, 2020

Hi! Since I have a background in industrial engineering, I am not so smooth with financial questions in case interview. Do you have tips or basic formulas regarding M&A questions or Investment questions (net present value etc.) which I should keep in mind?

Thanks in advanced!

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Emily
Expert
Content Creator
replied on Apr 30, 2020
BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University

Hi!

Given your background in engineering, it is unlikely the interiewer would grill you on very techincal M&A or investment questions.

That said, do prepare for basic business and finance knowlege. Read the course books for business fundamental and finance/accounting for any MBA courses, or read the materials for CFA level 1. Those should be good enough.

Best,

Emily

Was this answer helpful?
Luca
Expert
Content Creator
replied on Feb 26, 2020
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hello Leonie,

Don't worry about that, I am an industrial engineer and I hadn't any business experience before my first interview as candidate.

There are only few formulas that you should remember for the case interviews and you can easily find a list online. The most important among them are the net present value and the different methods to evaluate a company.

Best,
Luca

Was this answer helpful?
Anonymous replied on Apr 30, 2020
Was this answer helpful?
1
Antonello
Expert
Content Creator
replied on Feb 29, 2020
McKinsey | MBA professor for consulting interviews
Was this answer helpful?
Ian
Expert
Content Creator
replied on Feb 27, 2020
BCG | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Practice in cases ;). In particular, read cases/examples and ask for cases that have the following:

ROI

NPV

Breakeven

Margin

Markup

Was this answer helpful?
Clara
Expert
Content Creator
replied on Feb 26, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

As an engenieer, what they are going to demand in the interview is agility with numbers and good "feeling of the big numbers" (e.g., not slip a zero and saying 100 when it´s 1,000, etc.)

No formulas needed at this stage.

Hope it helps!

Cheers,

Clara

Was this answer helpful?
Vlad
Expert
Content Creator
replied on Feb 26, 2020
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I would recommend learning the basic accounting before you start the job, but you will not need that for the interview preparation. Also, the case is a very simplified business situation and the accounting concepts are very often neglected. Here is a list of things you will need to know (and you can google them one by one since it is really short):

  • Profitability calculations (Operating profit, net profit, cost structure, etc)
  • Profit / breakeven formula
  • Interest rates calculations
  • Compound margin
  • NPV using the Rule of 72, Perpetuity
  • CAGR using the Rule of 72

Best!

Was this answer helpful?
Emily gave the best answer

Emily

Content Creator
BCG Project Leader | 3+ years interview experience for BCG SEA recruiting | Kellogg MBA, NTU, Peking University
114
Meetings
2,156
Q&A Upvotes
14
Awards
37 Reviews