Is financial modeling commonly applied in consulting projects?

financial modeling
New answer on Jan 09, 2021
7 Answers
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Anonymous A asked on Jan 02, 2021

Since many consulting projects will directly impact a corporate's financials, I'm wondering whether financial modeling is largely applied in consulting. Taking a market entry or M&A project for example, how would the consultant gain a concrete result without building a comprehensive financial model?

I'm asking this question because consultants are from various backgrounds, and financial modeling doesn't seem a skill highlighted by consulting firms. Is it because consulting firms have specific teams that do the financial modeling work, or do they outsource these works to big fours or investment banks?

Thanks for your reply!

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Clara
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replied on Jan 02, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Good question.

It´s of couse very present in the job itself, but not particularly needed for prep.

Hope it helps!

Cheers,

Clara

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Adi
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updated an answer on Jan 02, 2021
Accenture, Deloitte | Precision Case Prep | Experienced Interviewer & Career Coach | 15 years professional experience

If you end in up a classic Finance/Deals/M&A project, then Yes. Otherwise Business Case and basic P&L diagnostic will be a part of pretty much every project- small or big.

(edited)

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Henning
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replied on Jan 02, 2021
Bain | passed >15 MBB interviews as a candidate

In most cases you would not have to do elaborate financial models like you would in PE or IB. However, you definitely do need to know how a P&L works and how to model one. Examples could be to project P&L line item impacts of different strategic options on the table.

Bottom line: Basic financial modelling is critical in consulting, but it doesn't need to be as sophisticated as in other industries.

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Antonello
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replied on Jan 02, 2021
McKinsey | MBA professor for consulting interviews

Hi,

I can confirm it's not very common for generalist consultants.

Taking a course might be helpful but absolutely not mandatory!

Hope this helps.

Best,

Antonello

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Ian
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replied on Jan 02, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

Yes, financial modeling, and other modeling (mostly in excel) is very common across consulting.

It's not emphasized as a pre-requisite becuase you will learn this on the job!

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Gaurav
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replied on Jan 05, 2021
Ex-Mckinsey|Certified Career Coach |Placed 500+ candidates at MBB & other consultancies

Hello there!

Yes, financial modeling is applied in consulting and involves the development of Excel models.

It's true that consultants have different backgrounds, so the skill will be cultivated on the job. The candidates don't need to have it in advance, though having basic knowledge would be useful.

Do you have any further questions?

Cheers,
GB

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Anonymous replied on Jan 09, 2021

Hi,

Financial modelling is an integral part of most consulting projects, I only have a handful of projects where financial modelling is not part of it.

If what you mean by "doesn't seem a skill highlighted by consulting firms" is it is not tested during interview that is because as long as you are smart and have a good logic this is something that can be taught easily.

The consulting firm will do the modelling themselves and try to get a modelling experience early in your tenure so you have more time to build the skill.

Best,

Iman

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Clara gave the best answer

Clara

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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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