Excel modeling tests: conventions and build order

Conventions graders look for

• Blue font for typed inputs, black for formulas, green for links to other sheets.
• No numbers typed inside formulas: every assumption lives in its own input cell.
• One formula per row, written once and filled right.
• Clear signs: decide whether costs are negative and stick to it.
• Check rows: sources equal uses, the balance sheet balances, debt never goes below zero.

Anchoring: the most common mistake

When you fill a formula right, references move with it. A dollar sign stops that: $B$2 always points at B2. Use it for any single input, like a growth rate, that every year should use.

Build order for a timed LBO test

1. 1

   Read everything first

   Note what must be answered, then set up the timeline and the input block.

2. 2

   Operating model

   Revenue to EBITDA to free cash flow, year by year.

3. 3

   Sources and uses

   Price, fees and refinanced debt; debt by tranche; the equity plug. Check sources equal uses.

4. 4

   Debt schedule

   Opening balance, repayments, closing balance, interest. Use opening balances unless told otherwise, to avoid a circular reference.

5. 5

   Cash sweep

   Cash available after mandatory repayments, applied by seniority with MIN so no tranche goes below zero.

6. 6

   Returns

   Exit value, net debt, equity, MOIC and IRR.

7. 7

   Checks and answers

   Check rows, then the written questions. Leave five minutes for these.

Shortcuts worth learning

Common mistakes