What financial knowledge/terms do I have to know for the case interview?

Question

I'm in the process of applying for an entry level consultant role. I'm currently doing a non-business undergraduate degree. Could anyone indicate all the financial concepts and terms I should be aware of? Thanks

Edit: I have no business background at all (History of Art major) but have decent understanding of how some industries operate but have little knowledge with basic technical words i.e. gross vs net profit

Answer 1

There is no complete list of X things to note. The case interview process is designed for you to solve it based on your abilities and without memorizing lists.

Ian has a great list in his answer. If you are very particular on finance, aim to have a basic understanding of the following

What ROI is and what it means - especially how it is applied in quant problems
Absolute basics of DCF modeling (you will never be asked to create it but it helps to just know what it is overall)
Metrics around financial risks (e.g., CCAR ratios)

In general know how finance works - how do different types of institutions (banks, hedge funds, crypto companies etc.) make money, what are the typical products they sell, what types of costs do they occur, what do the operations entail etc. Curiosity about the industry is much more important than memorizing lists.

Udayan

Answer 2

Hi there,

When it comes to casing, be careful with the mindset of “all the x I need to learn”. The ocean is vast and we can't boil it all ;)

That said, some of the key formulas/concepts are:

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

Answer 3

Hello,

I suggest starting by reading these pages on preplounge. These are the absolute must to be able to successfully “crack” a case. Then you should also have a look into what the other coaches recommended, but bear in mind that coming from a non-business background the interviewer will likely avoid going beyond what I suggest below.

https://www.preplounge.com/en/bootcamp.php/business-concept-library/common-terms-of-business/net-present-value-npv

https://www.preplounge.com/en/bootcamp.php/business-concept-library/common-terms-of-business/balance-sheet

https://www.preplounge.com/en/bootcamp.php/business-concept-library/common-terms-of-business/income-statement

https://www.preplounge.com/en/bootcamp.php/business-concept-library/common-terms-of-business/cash-flow-statement

Hope this helps, and good luck for the interview!

Answer 4

Hi!

There is a lot of content here on PrepLounge that is related to financial knowledge for case interviews.

Start from there!

Best,

Anto