"Strong financial modelling skills"

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momothetired

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I see this line in most PE job ads.
What exactly does this entail?
Simple inputting formulae into an excel sheet?
Sorry if this is a noob question, my background is in com sci / EE, and I’m really curious.
Any idea if there are any online examples?
 
I feel like this is code for “Those without IB or research experience need not apply.”
 
daj224 Wrote:
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> if you dont know, you dont have it
That’s not true. I’ve worked in finance and real estate for 17 months and I use Excel–often fairly high level modeling–quite often and I’m not even sure what an ad like that would mean. Does that mean building absurd spreadsheets with 20 or 30 macros–which my company delegates to on-site consultants–or does that simply mean you need to be able to navigate complicated templates with strong understanding of the formulas and how they are all connected? There’s a huge difference.
I’ll second the original poster–any insight into what “strong financial modeling skills” typically means?
 
Ok, let’s suppose that someone has financial modeling skills. What do you think someone with “STRONG” skills should be able to do, vs someone with just “AVERAGE” skills?
 
I would imagine that it simply means they want you be capable of building pro-formas and using various valuation techniques on projects and/or privately held companies. I sincerely hope this helps.
 
But that doesn’t answer anything. I have strong modeling skills in Excel, but weak skills in VBA, which is OK based on what I’ve seen from our partners and Seller/Servicers. All our people have strong modeling skills, but only a select few need to be able to build Excel templates with VBA macros that pull information from proprietary software into Access. I mean, I guess I appreciate that a lot of you are too arrogant to give a straight answer (because you can’t), but at least admit that it’s not that straightforward of an answer if you actually WORK in the industry, and particularly if you are trying to break in. The OP is a comp sci major and could probably embarrass any of us in software skills. The guy is just curious.
 
daj224 Wrote:
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> if you dont know, you dont have it
To be honest, I still agree with this one.
 
stokey99 Wrote:
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> =A1+A2+A3 <–weak skills
>
> =sum(A1:A3) <—expert skills
This is funny…
 
Black Swan Wrote:
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> daj224 Wrote:
> ————————————————–
> —–
> > if you dont know, you dont have it
>
>
> To be honest, I still agree with this one.
I’ve modelled various DE, Stochastic, Multivariable Calc and EE systems in various programming languages.
I still don’t know what “it” entails, but I don’t think it can be that hard, or so complex that it justifies an IB’s salary.
If it is, and you have “it”, would be good if you came out of the closet and shared what “it” entails. :)
 
I am very new to modeling but I will give you my hunch. If you can comfortably create/utilize a financial model for a company I would assume that is ‘strong’. Prior work experience with creating models would seem strong as well.
Right now I’m using Wall Street Prep and have a feeling I will fit into an average user once I’m finished with the books.
 
My guess is that strong financial modeling skills means that you could take a 10k filing for a public company and put together a spreadsheet from scratch that reveals equity value and enterprise value using a variety of modeling methods (comp ratios, DCF, residual income) and that you can justify why you use particular models and under what conditions they perform well.
Then you’d be expected to do the same with a private company and create a pro-forma model using info that the company provides you.
Compared to the stuff that momothetired described, it’s not conceptually that difficult; however, there are a lot of interrelated pieces and I’d expect someone with strong skills to have an intuitive feel for how the parts of the model go together such that by telling someone to tweak variable X, you can intuitively estimate the effects on all the key values and ratios.
 
Thanks.
That doesn’t sound too bad at all.
People get paid $XXX,XXX per annum for this? :o
bchadwick Wrote:
——————————————————-
> My guess is that strong financial modeling skills
> means that you could take a 10k filing for a
> public company and put together a spreadsheet from
> scratch that reveals equity value and enterprise
> value using a variety of modeling methods (comp
> ratios, DCF, residual income) and that you can
> justify why you use particular models and under
> what conditions they perform well.
>
> Then you’d be expected to do the same with a
> private company and create a pro-forma model using
> info that the company provides you.
>
> Compared to the stuff that momothetired described,
> it’s not conceptually that difficult; however,
> there are a lot of interrelated pieces and I’d
> expect someone with strong skills to have an
> intuitive feel for how the parts of the model go
> together such that by telling someone to tweak
> variable X, you can intuitively estimate the
> effects on all the key values and ratios.
 
momothetired Wrote:
——————————————————-
> Thanks.
>
> That doesn’t sound too bad at all.
> People get paid $XXX,XXX per annum for this? :o
>
>
Don’t be a smart@ss, those people work 90 hour weeks on AVERAGE with outliers going as high as 120. So divide that by 2.5 to make a normal work week, and after realizing you just got ripped off on over time, good health, and a family life for “the experience” just to get blanket fired 18 months later, and suddenly it’s not so rosy.
Not to mention that basic quant / excel skills are simply one skill set. You appear to be a programmer, you would be surprised to see how many quant types struggle with putting together cohesive presentations combining qualitative observations with quantitative backup for A list clients such as CEO’s and CFO’s of global S&P firms.
 
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