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23 McKinsey, Investments

Session 23: Development Areas, Regional-focus, Corporate Finance-Investments & Partner-style cases

Corporate Finance cases elicit the same response in candidates as math does to the average person. Yet, corporate finance cases should be addressed like a math problem. First, a candidate needs to identify the corporate finance issue being tested.

Consulting candidates need only focus on two issues: valuation and return-on-investment calculations. In a valuation case either a multiples-method or discounted-cash-flow method is being tested. That said, a candidate will rarely be expected to do the calculation. It requires more finance knowledge than the average candidate needs to know. A candidate should understand how to do the calculation and talk the interviewer through the very, very basic steps.

Return calculations are different. Candidates may be tested on these. Return on investment calculations are very simple since all the candidate needs to do is calculate all the returns and all the costs and apply the ROI formula. The challenge for most candidates is first identifying a corporate finance case, then determining ROI must be calculated and finally not double counting costs and revenues for the formula.

In our experience, it is more important for a candidate to understand the above and how it can be applied. Rarely will a candidate be failed except for a basic mistake on the ROI calculations.

We retain the heavy focus on partner style cases and preparation for German and Australian office interviews.

All recordings stop at the end of this session.

In the session descriptions which follow, we are using one description for 4 different candidates. Yet candidates do not perform the same, and while the descriptions are mostly accurate, there will be some differences as a few cases are brought forward, others moved back or candidates fail to prepare adequately. While these differences are minor, they sometimes occur.

Cases questions taught in the session:

Felix’s cases recorded in the session; Talk me through how you make decisions in your life, any major decision (Fit Question), Talk me through an e-commerce business trend and explain to me how it would impact a German banking CEO, Brainstorm the impact of Toronto opening a casino, Advise the Chinese Investment Corporation which wants to buy a bridge in the USA, Estimate the number of bridges in the world, McKinsey Global Institute Germany Productivity Auto discussion & McKinsey Corporate Finance – Investment function data interpretation.

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