Importance of financial modelling & financial knowledge at work?

Question

I have a couple of weeks to start my job, and I have followed PrepLounge expert's advice to sharpen my excel / business modeling skill.

Apart from this, what makes me nervous is the level of financial knowledge and financial modelling required in management consulting. Could you please share some experience on this? Will I need to be able to build up a comprehensive 3 statement financial model, and are familiar with corporate finance knowledge? Given my tight schedule, should I try to squeeze time to take online course on these topics? Thank you!

Answer 1

Hi there,

Remember, you are going into consulting not investment banking/finance!

Any modeling you will need will be learned while on the job. If you've built up your excel skills, that's great! If you want to take an accounting class, continue your daily reading, etc. that's helpful as well! But corporate finance knowledge shouldn't be needed.

Answer 2

Hi there,

Short answer is no. You don't need to do any of that.

Extra knowledge helps, but is not a must. You're a consultant not because of your knowledge, but because of your skills. Knowledge is rather expected with seniority and is something that you naturally pick up on as you progress through your career.

Additionally, you're not expected to know this kind of stuff when you're just getting started, so don't apply this sort of pressure on yourself.

By the way, I wrote a comprehensive article on what it's like to get started in consulting. You might find it useful - https://www.preplounge.com/en/articles/entry-level-consultant-what-is-it-like

Congrats on getting started!
Best,

Cristian

Answer 3

In consulting, you need to know how to read and interpret a financial statement, but not how to build one.

You need modelling skills, but not financial modelling (i.e., corporate finance) type of skills.

Doing some modelling work can help you in learning how to organize a spreadsheet (worksheets, assumptions, tables, etc.), which is relevant. The technical part of the financial modelling is not.

As such, no need to spend your spare (or busy) time on this.

Answer 4

The Short answer is that you do not need to be a modelling expert. You have been hired as a genrealist not an Investment banker.

However, you will be modelling scenarios, market sizing, etc. Having an understanding of how models work and a good grasp of excel is very helpful. I was in equity research and I have not built a single financial model in a year of working. However, I have built one basic market model with the junior consultant where knowing excel reasonably well was helpful.

If you happen to be going into specialist consulting on the PE side or investment, then maybe it could add value.

Answer 5

Unless you are in a direct finance/accounting type role, dont worry. You will pick this up along the way..there is no escaping that :).

All the best.