Math - Finance and Accounting Formulas

Hi,

There are a couple of resources on Preplounge, including a new one that was recently announcted (New on PrepLounge: Two new expert guides | PrepLounge.com)

I'd like to share a few thoughts regarding formulas and quant analysis in the case interview from the perspective of the interviewer/firm

• Most of the formulas that you -need- to know are not complicated, and their explanations could rather easily be found either online or from any of the guides on prep platforms
• Consulting firms are not testing your accounting knowledge, nor are they testing your technical math knowledge
• What is actually more important to me is the ability of the candidate to logically construct formulas and to logically use the correct formulas
• In fact, I've seen great candidates construct a formula that they did not know before, based on logical thinking

So as you are learning and understanding the formulas, do remember that it is always important to reason and have a logic on which formula to use and why.

All the best!

Yup! I've got one.

The main formulas/concepts you need:

• Breakeven
• NPV (with + without growth, perpituity + 1-2 years from now)
• % Change
• ROI
• Margin
• Markup
• Inventory turnover

Some other helpful Q&As:

https://www.preplounge.com/en/consulting-forum/math-concepts-6951

https://www.preplounge.com/en/consulting-forum/math-equations-their-use-7934

Hi there, 

I have developed a dedicated cheetsheet that covers all Finance & Accounting basics you'll need to pass consulting interviews.

Feel free to reach out via DM.

Regards, Andi

Hi there,

I would be happy to share my thoughts on your question:

• First of all, I am unsure whether there would be a universal cheat sheet, as firms might have slightly different expectations. Instead, I would advise you to focus on the core concepts, including cash flows, discounting, investment, profitability ratios, and other common accounting principles.
• Moreover, don't merely memorize the formulas but understand how and when to use them. The ability to apply the right tool in the context of the specific problem will make you succeed in the interviews. Familiarize yourself with different methods for calculating NPV or BE analysis as these can be essential tools in decision-making processes.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

Hi there!

Yes - feel free to reach out and I can provide one. 

Don't worry too much about NPV and such. 

These terms are almost never coming up. 

I spend 5 years and McKinsey and I coach candidates every day and I don't know many of these formulas by heart. Why would I? You can always look these things up if you don't use them on an every day basis. 

The interview is meant to test your skills, not your knowledge. 

And if these terms do come up, tell the interviewer that under normal circumstances you'd look up the formula, but you'd appreciate it if they could just give it to you now. 

Best,
Cristian

Hello!

Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Economic and Financial concepts for MBB interviews”, recently published in PrepLounge’s shop (https://www.preplounge.com/en/shop/prep-guide/economic_and_financial_concepts_for_mbb_interviews).

After +5 years of candidate coaching and university teaching, and after having seen hundreds of cases, I realized that the economic-related knowledge needed to master case interviews is not much, and not complex. However, you need to know where to focus! Hence, I created the guide that I wish I could have had, summarizing the most important economic and financial concepts needed to solve consulting cases, combining key concepts theorical reviews and a hands-on methodology with examples and ad-hoc practice cases.

It focuses on 4 core topics, divided in chapters (each of them ranked in scale of importance, to help you maximize your time in short preparations):

·        Economic concepts: Profitability equation, Break even, Valuation methods (economic, market and asset), Payback period, NPV and IRR, + 3 practice cases to put it all together in a practical way.

·        Financial concepts: Balance sheet, Income statement/P&L and Performance ratios (based on sales and based on investment), +1 practice case

·        Market structure & pricing: Market types, Perfect competition markets (demand and supply), Willingness to pay, Pricing approaches, Market segmentation and Price elasticity of demand, +1 practice case

·        Marketing and Customer Acquisition: Sales funnel, Key marketing metrics (CAC and CLV) and Churn, +1 practice case

Feel free to PM me for disccount codes for the guide, and I hope it helps you rock your interviews!