What are case studies?
Case studies are stories. They present realistic, complex, and contextually rich situations and often involve a dilemma, conflict, or problem that one or more of the characters in the case must negotiate.
A good case study, according to Professor Paul Lawrence is:
“the vehicle by which a chunk of reality is brought into the classroom to be worked over by the class and the instructor. A good case keeps the class discussion grounded upon some of the stubborn facts that must be faced in real life situations.”
(quoted in Christensen, 1981)
Although they have been used most extensively in the teaching of medicine, law and business, case studies can be an effective teaching tool in any number of disciplines. As an instructional strategy, case studies have a number of virtues. They “bridge the gap between theory and practice and between the academy and the workplace” (Barkley, Cross, and Major 2005, p.182). They also give students practice identifying the parameters of a problem, recognizing and articulating positions, evaluating courses of action, and arguing different points of view.
Case studies vary in length and detail, and can be used in a number of ways, depending on the case itself and on the instructor’s goals.
- They can be short (a few paragraphs) or long (e.g. 20+ pages).
- They can be used in lecture-based or discussion-based classes.
- They can be real, with all the detail drawn from actual people and circumstances, or simply realistic.
- They can provide all the relevant data students need to discuss and resolve the central issue, or only some of it, requiring students to identify, and possibly fill in (via outside research), the missing information.
- They can require students to examine multiple aspects of a problem, or just a circumscribed piece.
- They can require students to propose a solution for the case or simply to identify the parameters of the problem.
Finding or creating cases
It is possible to write your own case studies, although it is not a simple task. The material for a case study can be drawn from your own professional experiences (e.g., negotiating a labor dispute at a local corporation or navigating the rocky shoals of a political campaign), from current events (e.g., a high-profile medical ethics case or a diplomatic conundrum), from historical sources (e.g., a legal debate or military predicament), etc. It is also possible to find published cases from books and on-line case study collections. Whatever the source, an effective case study is one that, according to Davis (1993):
- tells a “real” and engaging story
- raises a thought-provoking issue
- has elements of conflict
- promotes empathy with the central characters
- lacks an obvious or clear-cut right answer
- encourages students to think and take a position
- portrays actors in moments of decision
- provides plenty of data about character, location, context, actions
- is relatively concise
Using case studies
How you use case studies will depend on the goals, as well as on the format, of your course. If it is a large lecture course, for example, you might use a case study to illustrate and enrich the lecture material. (An instructor lecturing on principles of marketing, for example, might use the case of a particular company or product to explore marketing issues and dilemmas in a real-life context.) Also in a large class you might consider breaking the class into small groups or pairs to discuss a relevant case. If your class is a smaller, discussion-format course, you will be able to use more detailed and complex cases, to explore the perspectives introduced in the case in greater depth, and perhaps integrate other instructional strategies, such as role playing or debate.
Regardless of the format in which you employ case studies, it is important that you, as the instructor, know all the issues involved in the case, prepare questions and prompts in advance, and anticipate where students might run into problems. Finally, consider who your students are and how you might productively draw on their backgrounds, experiences, personalities, etc., to enhance the discussion.
While there are many variations in how case studies can be used, these six steps provide a general framework for how to lead a case-based discussion:
- Give students ample time to read and think about the case. If the case is long, assign it as homework with a set of questions for students to consider (e.g., What is the nature of the problem the central character is facing? What are some possible courses of action? What are the potential obstacles?)
- Introduce the case briefly and provide some guidelines for how to approach it. Clarify how you want students to think about the case (e.g., “Approach this case as if you were the presiding judge” or “You are a consultant hired by this company. What would you recommend?”) Break down the steps you want students to take in analyzing the case (e.g., “First, identify theconstraints each character in the case was operating under and the opportunities s/he had. Second, evaluate the decisions each character made and their implications. Finally, explain what you would have done differently and why.”). If you would like students to disregard or focus on certain information, specify that as well (e.g., “I want you to ignore the political affiliation of the characters described and simply distinguish their positions on stem-cell research as they are articulated here.”)
- Create groups and monitor them to make sure everyone is involved. Breaking the full class into smaller groups gives individual students more opportunities for participation and interaction. However, small groups can drift off track if you do not provide structure. Thus, it is a good idea to make the task of the group very concrete and clear (e.g., “You are to identify three potential courses of action and outline the pros and cons of each from a public relations standpoint”). You may also want to designate roles within each group: for example, one individual might be charged with keeping the others on task and watching the time; a second individual’s role might be to question the assumptions or interpretations of the group and probe for deeper analysis; a third individual’s role might be to record the group’s thoughts and report their decision to the class. Alternatively, group members could be assigned broad perspectives (e.g., liberal, conservative, libertarian) to represent, or asked to speak for the various “stake-holders” in the case study.
- Have groups present their solutions/reasoning: If groups know they are responsible for producing something (a decision, rationale, analysis) to present to the class, they will approach the discussion with greater focus and seriousness. Write their conclusions on the board so that you can return to them in the discussion that follows.
- Ask questions for clarification and to move discussion to another level. One of the challenges for a case-based discussion leader is to guide the discussion and probe for deeper analysis without over-directing. As the discussion unfolds, ask questions that call for students to examine their own assumptions, substantiate their claims, provide illustrations, etc.
- Synthesize issues raised. Be sure to bring the various strands of the discussion back together at the end, so that students see what they have learned and take those lessons with them. The job of synthesizing need not necessarily fall to the instructor, however; one or more students can be given this task.
Some variations on this general method include having students do outside research (individually or in groups) to bring to bear on the case in question, and comparing the actual outcome of a real-life dilemma to the solutions generated in class.
Barkley, E. F, Cross, K. P. & Major, C. H. (2005) Collaborative Learning Techniques: A Handbook for College Faculty. San-Francisco: Jossey-Bass.
Christensen, C. R. (1981) Teaching By the Case Method. Boston: Harvard Business School.
Davis, B. G. (1993) Tools for Teaching. San Francisco: Jossey-Bass.
Before we look at individual Cases, it is important to begin by looking at analysis frameworks that commonly can be used to address Case Study questions. In this chapter, we will outline some of the core frameworks and some additional Consulting concepts that are important to grasp and will form part of many interviews. The frameworks will be helpful to answer certain types of cases, depending on the type of case. In reality, few case interviews or real-life business situations cover just one concept or business problem, so you have to have the flexibility to apply a range of concepts/structures. For example, a Company bringing a new product to market would require a market size analysis, competitor analysis, as well as understanding the key customer segments.
The more you practice, the easier the cases will become and the more articulate and structured you’ll be in your answers.
An important note on this: historically, the vast majority of Consulting candidates have used specific business frameworks to answer cases. Frameworks remain important as concepts to answer Case Studies, but you should absolutely avoid any rigid use of a specific framework. In reality, the main purpose of learning the frameworks is to help you to structure your answers, just as the case situations in our later examples should do.
The key frameworks that follow should be used directly in certain Case situations, but more broadly they should be used as a way to expand your strategic thinking, which is the critical component of success in the Case Study interview process. Ultimately, a top-flight candidate will build his or her own framework/structure for evaluating the Case as it progresses, often drawing from many of the frameworks and concepts in this module, and potentially others. In other words, you should absolutely avoid using the phrase, “I will apply framework X to this case.” However, be aware of the “famous” frameworks in case they are mentioned in an interview setting, and don’t be shy about referencing them as you dive into the specifics of the Case Study you’re evaluating.
Porter’s Five Forces
Porter’s Five Forces has become an incredibly well known framework in the business strategy world. It is probably the most famous of all of them. It was introduced by Harvard Professor and Monitor Consulting firm founder Michael Porter. Porter’s Five Forces is a high-level framework that you can draw upon to perform a market landscape and competitor dynamics analysis. It can help determine whether a market or company is attractive, whether the client for whom the analysis is being performed is a private equity firm thinking about buying a company, or a major company thinking about entering or exiting a certain market segment. In most cases, a Case Study will address at least some of the components found in this framework.
Here are the Five Forces in detail:
Porter’s Five Forces
- Threat of New Entrants (effectively, this is “Barriers to Entry”)
- Legal or regulatory barriers (for example, patents or government contracts)
- Economies of scale
- Cost advantage (for example, unique access to lower raw material costs)
- Access to distribution channels
- Product differentiation (for example, how is this product different?)
- Competitive Dynamics
- Industry growth rate
- Industry fragmentation
- Level of switching costs
- Motivation to reduce prices (for example, from excess capacity)
- Supplier Power
- Level of substitute products
- Buyer’s decision influenced by supplier
- Supplier inputs/products have high switching costs
- Supplier has potential to forward integrate
- Supplier accounts for large share of the inputs/products
- Buyer Power
- High customer/client concentration
- Level of commoditization of product/input
- Level of switching costs for buyer
- Buyer has significant product/market information
- Threat of Substitutes
- Substitute products/services that can compete on price and/or quality
- Switching costs to shift to substitute products
The 3 Cs
This simple framework has been around for a long time as a way to think about any industry or company, and applies broadly to a wide range of Case Study questions. If you compare the description below to that of Porter’s Five Forces above, you will see that there is substantial overlap.
The “3 Cs” approach is to address any Case situation by assessing the:
The 3 C’s
- Company: the first C is about understanding the operations of the Company itself and how the Company makes money.
- Product/service offering
- Pros and cons of product/service
- Value chain
- Profitability analysis
- Revenue (price × volume) and expenses
- Other Company factors
- Core competencies
- Regulatory environment
- Distribution network
- Management and core employees
- Product/service offering
- Competition: the second C is about understanding how the competitors impact your client and how the competitive dynamics will change over time.
- Competitor mix/make-up
- Market share
- Financial situation (for example, deep pocket competitors?)
- Other competencies (for example, marketing or distribution channels)
- Competitor products/services
- Value proposition versus client
- Value chain
- Competitor mix/make-up
- Customers/Clients: the third C is often overlooked but is fundamental, and consists of knowing your clients/customers. Always ask for available customer information, as knowing what your customer wants/needs is important to winning in business.
- Customer mix
- Demographics (age, gender, etc.)
- Value of core customers/clients
- Wants and needs of customers/clients
- Position with customer/client segments
- Customer/client segment sizes
- Customer/client segment shares
- Customer/client segment growth rate
- Key drivers of customer/client decisions
- Product characteristics
- Personnel (especially for B2B)
- Customer mix
The 4 Ps
This framework is often used specifically whenever there is a marketing component involved in a case (for example: how to increase sales resulting from any profitability optimization case, deciding on an approach to enter a market, etc.). When combined with the 3 Cs, this framework can cover many topics and as you practice more Case Study questions, you’ll develop a better sense of when and how to draw from these frameworks.
The “4 Ps” approach is to address a marketing-oriented Case situation by assessing the:
The 4 P’s
- Product: it is critical to understand the Company’s product/service and its value proposition.
- Company product/service qualities, features, attributes
- Commoditized or differentiated?
- Competitor product/service qualities, features, attributes
- Commoditized or differentiated?
- Substitute product options
- How close are the substitutes?
- Value proposition versus substitutes (price, quality, etc.)
- Switching costs
- Customer value proposition
- Why are clients/customers purchasing the product?
- Brand, availability, service, value, reliability, aesthetic, etc.
- Company product/service qualities, features, attributes
- Price: it is critical to understand the Company’s optimal pricing strategy. Price is often the key driver of profitability and success. Review the pricing optimization section for more points on pricing— this also offers a good approach of the key issues to consider on price.
- Price elasticity
- Is our product sufficiently better to justify a higher price? Or is it somewhat commoditized?
- Customer loyalty/lock-in
- Supply/demand: current state of demand and supply for the product or service
- Price of substitute products/services
- Price of competitor products/services
- Market positioning
- Brand position and perception
- What is the cost for the client to produce the product or offer the service?
- Price elasticity
- Placement: this is about getting the products to the customers/clients and how the Company does so.
- Which distribution channels to use?
- Select/exclusive channels or wide distribution network?
- Seamless delivery to customers
- Internal transport or outsource?
- Specific location within the channels
- Specific areas of a site online
- Product placement in stores
- Which distribution channels to use?
- Promotion: This aspect (which could be called “marketing strategy,” if only the word “marketing” started with the letter “p”) is about reaching and attracting the customer/client. There is overlap here with other areas, especially product, because a big part of product is understanding customer wants and needs which helps determine the promotional aspects.
- Which markets/customers should the Company target?
- Customer/client awareness
- Is the Company reaching and attracting its target market?
- What are the most effective marketing campaign strategies?
- Return on marketing spend
- Are we retaining our customers/clients?
- Can we up-sell or cross-sell to our current customers/clients?
- Which markets/customers should the Company target?
SWOT (Strengths, Weaknesses, Opportunities, Threats)
SWOT analysis is more of a mini-framework, specifically for quickly evaluating a single company in an industry. In that regard, it’s far less complete than other frameworks, and can often miss important details. However an interviewer could potentially ask you for a SWOT analysis, and you should be prepared to apply it in that case.
SWOT is effectively a quick, high-level market landscape/competitive dynamics analysis arranged using the following terminology:
- Strengths: Company strengths within an industry
- Weaknesses: Company weaknesses within an industry
- Opportunities: Company opportunities available within the industry (or potentially by branching into a new industry)
- Threats: Company threats within the industry (or potentially from companies whose primary business is in another, related industry, or from disruptive technologies that potentially threaten all companies in an industry)
It should be noted that SWOT can be extended from comparing a specific company to the others in the industry, to comparing a specific industry or sub-industry to other, related industries or sub-industries within the economy. For example, a classic SWOT analysis might entail benchmarking Delta Airlines with the airline industry as a whole; an extension could entail benchmarking the entire airline industry against the broad transportation sector.
You should be very familiar with the well-known frameworks already discussed in this chapter, although it is unlikely that an interviewer would ask you to use a particular framework in your analysis. Instead, it is typically expected that you draw on the concepts encompassed by these frameworks and/or the concepts that we will outline in the next chapter, which breaks down the common Case Study interview question types.
In addition to these frameworks, there are a number of other frameworks that you will read about on certain Consulting firm sites, but you will probably not be expected to know them in detail or apply them specifically in an interview. It does not hurt, however, to be familiar with them. Therefore, we include these example frameworks for your reference and encourage you to at least familiarize yourself with the basics of them:
Additional Analysis Concepts
There are additional, relatively simple analytical techniques that you should be prepared for in Consulting Case Study interviews. These techniques tend to be numerical, and occur frequently, although none are comprehensive or broad enough to fall into the category of a “Framework”:
- Break-Even Analysis
- Fixed vs. Variable Expenses
- Net Profit Margin
- Return on Investment (ROI)
- Compound Annual Growth Rate (CAGR)
- Lifetime Customer Value (LCV; sometimes referred to as “User Lifetime Value”)
- Product Life Cycle
- Opportunity Cost
- Elasticity (Supply or Demand)
- Financial Statements, Accounting, and Valuation
Let’s take a deeper look at each analysis category.
- The gist of Break-Even Analysis cases is that the Fixed Costs of a business—i.e., the costs that are unavoidable—need to be overcome by making profit from sales of products. Presumably, each incremental sale contributes to profit at a rate that can be determined (or at least estimated); the question that is to be answered is, “How many units do I have to sell in order to overcome my Fixed Costs, i.e., to ‘Break Even’?”
- In other words, the Break-Even Point is the number of units sold at which Revenue equals Total Expenses (Fixed Expenses plus Variable Expenses).
- Break-Even Analysis is often applied when deciding whether to develop a new product or make a capital equipment investment, as well as helping in making decisions around how to price products and service and the number of units to produce.
- Formulaically, Break-Even Number of Units = Fixed expenses ÷ (Revenue per unit – Variable Expenses per unit).
- Note that the expression (Revenue per unit – Variable Expenses per unit) is often referred to as the Unit Contribution Margin.
- An understanding of how to analyze Expenses and differentiate Fixed Expenses from Variable Expenses is useful in order to run a Break-Even Analysis of a company.
- Break-Even Analysis can get more complex, as there are microeconomic and macroeconomic considerations that can change both the Fixed and Variable Expenses, but the basic concept is an important one; therefore you will likely come across some form of Break-Even Analysis in Consulting Case Study interviews.
- Note that this concept can also be translated into a question on Break-Even Price, i.e., “Assuming a certain volume of sales, what is the sales price required in order to break even?”
- Formulaically, Break-Even Price = (Fixed Expenses ÷ Sales Volume) + Variable Expenses per unit.
- Note that the expression (Fixed Expenses ÷ Sales Volume) equates to the required Unit Contribution Margin at the assumed Sales Volume in order to break even. In other words, Break-Even Price = Required Unit Contribution Margin + Variable Expenses per Unit.
Fixed vs. Variable Expenses
- Fixed Expenses (or Fixed Costs) are expenses that do typically fluctuate regardless of the production or sales levels. These expenses can be viewed as “unavoidable,” at least in the short-term. Typical examples for Fixed Expenses include Rent, Insurance, Mortgage Payments, and Corporate Overhead Expenses.
- Variable Expenses (or Variable Costs) are impacted by changes in production or sales levels – typical examples include are Raw Materials, Direct Labor Expenses (wages and benefits), and delivery costs.
- Understanding a Company’s Fixed vs. Variable Cost structure is important in a variety of cases (such as in Break-Even Analysis, discussed above).
- When analyzing a Case, always keep in mind that total Fixed Expenses remain constant as volume rises (or falls), but Fixed Expenses per unit decline as volume rises (rise as volume falls). For example, if a computer component manufacturer has $1,000 of Fixed Expenses and produces 100 components, then the $1,000 of Fixed Expenses will be spread across 100 components (= $10 of Fixed Expenses per unit). If the Company produced 200 components, then the Fixed Expenses per unit would decrease to $5 per unit.
- Variable Expenses, meanwhile, rise proportionately as volume increases, so Variable Expenses per unit remain constant.
Net Profit Margin
- When an interviewer asks a candidate to calculate the Net Profit Margin (a.k.a. Profit Margin or Net Income Margin), he or she will usually be referring to the total Net Income of a company or business line as a percentage of its Revenue:Net Profit Margin = Net Income ÷ Total Revenue.
- The interviewer could also refer to Gross Profit Margin, which is simply Gross Profit as a percentage of revenue:Gross Profit Margin = Gross Profit ÷ Total Revenue
- Similarly, the interview may also refer to Operating Profit Margin (EBIT Margin), or EBITDA Margin. In both cases, thus is simply the figure in question (Operating Profit, a.k.a. EBIT, or EBITDA) as a percentage of Revenue.
Return on Investment (ROI)
- Return on Investment (ROI) is a ratio that determines the return, or Profit, from capital invested. ROI is used in consulting interviews as a way to evaluate the return of a particular investment or to assess the feasibility of a potential investment or acquisition. Many companies have an internal ROI metric for capital investments.
- Standard ROI is calculated as follows: Profit from the Investment (Revenue minus Costs) ÷ Capital Invested.
- Note: Return on Assets (ROA) is a variation of this concept, but instead revolves around all capital invested in a project (Liabilities + Equity), rather than just Equity invested, which is typical for an ROI calculation.
Compound Annual Growth Rate (CAGR)
- The Compound Annual Growth Rate (CAGR) is the percentage rate at which any figure, such as number of units sold, a population, or an investment must grow in each year to reach a given end value over a certain amount of time. (Note that this is not the only growth path to grow from a beginning number to an ending number, but it is the only growth path that is the same growth rate every year.)
- The formula to calculate CAGR is: [(Ending Value ÷ Beginning Value)^(1 ÷ Number of Years)] – 1.
- For example: If sales grew from $1,000 in the year 2001, when a store opened, to $2,100 in 2012, what is the CAGR?
- Answer: [(2,100 ÷ 1,000)^(1 ÷ 11)] – 1 = 2.1^(0.090909) = 7.0%
- Thus, the CAGR between 2001 and 2012 was 7.0%.
- CAGR is very similar in concept to Internal Rate of Return (IRR), which is the annual rate of return on an investment if its value grows by a specific multiple over a specific amount of time.
- Use the Rule of 72 to estimate CAGR whenever possible. The rule of 72 simply states that a quantity will roughly double in value whenever the number of years times the annual growth rate equals 72.
- Using the above example, we can see that the quantity slightly more than doubled, so the answer should be slightly above (72 ÷ 11) percent, or slightly above 6.6%. Indeed, it is!
Lifetime Customer Value (LCV)
- Lifetime Customer Value (LCV) projects the total profitability attributed to a firm’s future relationship to a typical customer.
- The idea behind this microeconomic analysis is to determine the reasonable cost to win or acquire a customer (or to maintain an existing customer, i.e., prevent him or her from “churning,” or switching to a competitor). It can also be used to determine level and type of customer service to provide, and as another way to estimate the value of a business. (In theory, the value of a business should equal the number of existing customers × the LCV per customer, plus growth opportunities.)
- The steps to calculate the LCV are as follows:
- Estimate the remaining customer years; in other words, how long is a typical customer expected to last with the company?
- Estimate future Revenue per year per customer, based on product volume per customer × price
- Estimate Total Expenses for producing those products (either separating Fixed Costs out or allocating them on a per-customer basis)
- Calculate the Net Present Value of the future profit (Revenue – Expenses) per customer (in other words, discount these future profits back into today’s equivalent dollars)
Product Life Cycle
- Important for market sizing problems, the Product Life Cycle helps to calculate and project the annual market size for a given market/industry. It is often used by companies to project their own anticipated Revenue figures.
- Formulaically, Annual Market Size = Total Revenue of a product outstanding ÷ Average life of the product. For example, “Total Revenue of a product outstanding” might represent the sticker price of all cars driven in the US, while the “Average life of the product” would be the average number of years a car is driven.
- It is also worth knowing the four steps in the Product Life Cycle Curve, as the concept could come up in a hypothetical product case.
- Emerging: A new product or technology that is in initial adoption phases and therefore has very rapid growth rates (for example: electric cars)
- Growth: Product adoption is becoming widespread but still growing at an above-average rate (for example: smartphones)
- Maturity: Product adoption is widespread, or at least stabilized; growth typically comes only from price increases and growth in GDP (for example: breakfast cereal)
- Declining: Technological obsolescence, shifting consumption patterns, or increased market competition has resulted in total growth rates that are below-average or negative (for example: dairy products or wireline telephones)
- Opportunity Cost simply refers to the concept that if a person or company does X, the person or company necessarily cannot also do Y. This is an important concept throughout business and consumer decision making, as there are only finite resources available in most cases (time, money, etc.).
- Thus, for example, it is unwise for a company to invest $1 million in a project earning $3 million if that same investment prevents it from investing the $1 million in another opportunity that would earn $10 million. In this case, the Opportunity Cost can be defined as the loss of incremental profit of $7 million ($10 million potential profit lost minus the $3 million earned).
- If X does not prevent also doing Y, then there is said to be “no Opportunity Cost” of doing X with respect to Y. In the above example, if the company had $2 million to invest and the capacity to manage both projects, it could reap the profits from both projects, i.e., $13 million.
Elasticity (Supply or Demand)
- Elasticity is a concept from microeconomics that describes the tradeoff between Quantity and Price.
- Specifically, Elasticity is the ratio of a percentage change in quantity to the percentage change in price. Formulaically, Elasticity = % Change in Quantity Demanded or Supplied ÷ % Change in Price.
- For example, if an increase in the price of oranges from $1.00 apiece to $1.50 apiece causes demand for those oranges to fall from 100 units to 80 units, then the % Change in Quantity = –20% and the % Change in Price = 50%. Therefore the Elasticity of Demand = (–20 ÷ 50) = –0.4.
- Note that for normal goods, Elasticity of Demand will always be negative (higher prices mean less quantity is purchased) while Elasticity of Supply will always be positive (higher prices mean that suppliers are willing to produce and/or supply more goods).
- The concept comes up in multiple types of cases, such as pricing optimization. Clients often ask what the impact would be on volume if they adjust the price. Usually the correct answer is to increase prices in Inelastic markets (price increases lead to a relatively small decrease in products sold) and decrease them in Highly Elastic markets (price increases lead to a large decrease in product sold).
Financial Statements, Accounting and Valuation
Unlike Investment Banking interviews, which can be detailed and highly technical in terms of Finance and Accounting, Consulting interviews and the Consulting job itself revolve much more around estimation and exercising business judgment and “what-if” analysis. Rarely would a Consultant be called upon to develop and maintain a detailed, precise financial model for Discounted Cash Flow valuation, for example.
That being said, a basic-to-moderate understanding of the Income Statement, Balance Sheet and Statement of Cash Flows, and how they work together, is very relevant to many interviews. (You might even be provided with a basic Income Statement or Balance Sheet of a company as part of a Case Study interview question.)
Rather than reinventing the wheel and writing content on Finance and Accounting in this guide, we recommend you review any standard, basic Financial Accounting textbook to familiarize yourself with the components of basic Financial Statements:
- Income Statement (Revenue, Expenses, and Profit)
- Balance Sheet (Assets, Liabilities, and Equity)
- Statement of Cash Flows (Cash Flows broken out into the following categories of sources: Operating Activities, Investing Activities and Financing Activities)
We also recommend that you familiarize yourself with some basic core Finance concepts (Net Income, EBIT (Operating Profit), EBITDA, Free Cash Flow, Internal Rate of Return, Net Present Value, and Enterprise Value are good places to start) and core Valuation techniques (Cost of Capital, Comparable Company Analysis, Precedent Transaction Analysis, Discounted Cash Flow analysis, and Leverage Buyout analysis). Although these concepts will not be tested and do not form a major part of general Consulting Case Study interviews, these topics can appear in a general discussion about a particular business situation and you should be able to discuss them at least on a basic level.
If you are applying for a job in Business Development, or for a Consulting position in a Corporate Finance group or at a firm that does a lot of Corporate Finance Consulting work, then you should definitely study up and be prepared for these core Finance and Accounting concepts, because they will likely be tested on in detail in your interviews. In addition to introductory Finance and Accounting textbooks, we highly recommend that these candidates read the Street of Walls Investment Banking Technical Training guide, which addresses complex details around Financial Statements, Accounting and Valuation at a very detailed level. (We also recommend this training guide in general to anyone who is interested in advancing their Finance and Accounting skills—particularly when it comes to Corporate Valuation.)←Consulting Case Study Interview: OverviewConsulting Case Study Types→