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Setup case math - beyond case math formulas (CAGR,NPV,% change,etc.) and practicing +_\*, how do you setup analysis?
Overview of answers
Hi!
The most important thing is to think through (and explicitly state!):
1. What do you want to find out? (--> what will be the meaning of the result? And how will this help me towards answering the core question of the client?)
2. What are the subcomponents of this target metric? And how are these components linked (e.g., by summing up? multiplying? other?)
3. Lay out how to quantify each component
4. Do the calculation and then aggregate
5. Check the result for plausibility and discuss what it means
One additional thing: CAGR and NPV are concepts you should understand, however you will NEVER be asked to do such calculations in an MBB case interview! The operations will be far more elementary than this. MBB firms are NOT interested in your calculation slkills, but in your conceptual strength and analytical rigor!
Cheers ,Sidi
Hello!
There are two main things to tackle when getting ready for the math part:
- Formulas (e.g., CAGR,NPV,% change, etc.): having the concept clear is key, but you won´t be asked to calculate CAGR mentally in an interview.
- Math agility: more related to quickly operating with numbers, perform calculations securely and having the right "order of magnitude".
For testing the last one, I would suggest you to try the Math Tool in the page, and gain some agility.
Hope it helps!
Cheers,
Clara
Hello,
The only way to improve is to practice. I confirm that GMAT integrated reasoning section is a good source to learn how to handle a lot of information.
Best,
Luca
Hi,
I recommend using the following approach while doing your calculations:
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Tell the interviewer your approach / formula
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Check with the interviewer that your approach is correct
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Ask for a minute to perform the calculations
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Check any assumptions you make with the interviewer. If you need to round the number - you have to check with the interviewer as well
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Come to the interviewer with some intermediate calculations results to check that you are moving in the right direction
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Come up with the final answer
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Provide the conclusions from the final answer
Several things are important during the calculation phase of the interview:
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Making no mistakes
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Calculating in the most efficient way
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Calculating fast
The following skills will speed up your calculations and reduce the probability of making a mistake:
1) Learn how to solve equations and systems of equations. As you could have noticed, some cases require solving an equation. You can use GMAT books to practice.
2) Learn how to multiply double-digit numbers really fast. It takes just a couple of hours to learn how to apply this method on paper and a couple of days to start doing these calculations mentally, but it's worth it. Please follow the link for more details: https://www.youtube.com/watch?v=6ndkkPZYJHo
3) Learn how to work with zeros.
Simply always use the powers of 10. Then you'll be able to multiply / divide the numbers and sum up / subtract the powers separately:
For example: 300 x 9000 = 3 x 10ˆ2 x 9 x 10ˆ3 = 3 x 9 x 10ˆ(2+3) = 27 x 10ˆ5 or 2.7 Mln
If you get used to writing all the numbers that way, you will never lose zeros.
4) Learn the division table. This method will help you calculate any percentage problems like market shares or margins. For example, if your market is $620M and your revenues are $5.1M you can use 5/6 or 83.3%, as a proxy to calculate the market share. By adjusting to zeroes and slightly decreasing the number, you'll get 8.2%
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