Im working as a senior auditor but have an interview in a few weeks for an equity analyst position researching and analyzing for stocks. The big prereq is having DCF knowledge/experience. While they are interviewing me knowing i only have auditing experience as a qualified CPA, I know this wont get me the job. Where can i get quickly gain some discounted cash flow knowledge, above and beyond what I have done for CFA Level 1? Thanks in advance
CFA Level 1 = non-existant DCF experience. If someone tells you to do some financial modelling, with your CFA theory backing you up, are you able to build something? So even with my limited experience, I can say there might be other people better fit for the job. Its hard to compare to someone who works with models all day - I think practical work experience reallyi is required - unless you can BS your way thru…
> Where can i get quickly gain some discounted cash > flow knowledge, above and beyond what I have done > for CFA Level 1? > > Thanks in advance 1. Download this spreadsheet: http://www.stern.nyu.edu/~adamodar/pc/fcff2st.xls 2. Make sure you understand all the calculations, especially the ones where the cash flows are discounted using the WACC 3. Make sure you understand the difference between FCFF and FCFE. The above three steps, plus a good understanding of CAPM, should be enough to fully explain the DCF methodology.
Thanks Billy. Will do that. Ive heard about Adamodar. I might also check out his Investment Valuation book as well - or is that overkill???
You won’t be able to go through it all before an interview (assuming the interview is sometime this week), but it’s definitely worth reading.
update on this – I didn’t get the role as my DCF experience wasn’t sufficient. any ideas how I can build on this? I know I need to get some work related dcf/modelling experience but this is difficult when you are employed as a financial reporting (accounting) and taxation manager, irrespective of the fact that it is within an investment bank. I guess im looking for a type of back door entry into equity research if possible, since noone seems to be interested in you without relevant experience! any guidance would be greatly appreciated.
What did they ask you in your interview relating to DCF? http://www.investopedia.com/university/dcf/ --DCF Overview/Tutorial
thabnks for the link. it was nothing I said/did wrong. more to the fact that I didn’t have that on the job modelling experience. looking for someone with a year+ experience in that area really from what I gathered. im looking for a way to get that without going back to a big 4 accg firm valuations team. I couldn’t think of anything worse – especially while studying for CFA. id fail for sure with those hours!