Excel in the case interview

Case interview preparation

To help candidates prepare for the case study interview, we introduce two example cases that have previously been used in our recruitment interviews.

Our first case, "Scandinavian Sandwiches", is a typical first round case that is used to assess the candidate's ability to identify key parameters for market sizing, quantify information based on given assumptions, and form hypotheses based on financial data.

Our second case, "Ferris Wheel", is a more advanced investment calculation assignment typically used in later interview rounds. Specifically, the case is used to evaluate the aptitude for breaking larger issues into manageable entities and forming financially sound recommendations based on fact-based analysis.

Both cases are divided into easy-to-follow steps with clear instructions presented below. Please click on the (+) sign for case parameter data or model answers for each step. Our real-life case interviews follow a similar format of breaking down each case into approximately three to five steps.

1. Scandinavian Sandwiches: Evaluating market size and profitability

Typically it is a good approach to start solving a market sizing case by structuring what you need to know, that is considering the key parameters before rushing into assumptions with insufficient data. Sometimes the interviewer may not give you all the data but encourage you to make an educated assumption. For this you should use your own experience. Also here having a structured approach helps, because it ensures your solving method is transparent, and you can return to adjust your assumptions if needed.

a. Define 4-5 parameters you need to estimate total annual value of Norwegian pre-made sandwich market

The exact answer you end up with depends heavily on your assumptions. This case tests your comfort level with large numbers and percentage calculations.

With the parameters given above, the our model answer is 210MEUR. More broadly, a realistic market size range would be from 200MEUR to 250MEUR.

Regardless of your result, it is always good to conduct a sanity check and communicate this to your interviewer. Given the Norwegian population, with this market size, an average person would spend approximately 40EUR on filled rolls annually (equivalent to 8 filled rolls). This appears to be on a reasonable ballpark as an average.

Revenue represents the sales of the company.

Variable costs represent the costs related to the number sold products (direct materials)

Fixed costs represent the costs independent of the number of sold products (facilities, personnel costs, marketing, administration)

EBIT = Revenue - Variable costs - Fixed costs

Net result = EBIT - Depreciation - Taxes

c. Present 3-4 hypotheses on the company's growth and profitability by looking at its financials

  • The company has grown rapidly over the three years, but its profitability is fluctuating
  • During the last year of the period, the company was unprofitable
  • The variable costs have stayed stable, accounting for approx. 30% of the revenue
  • The fixed costs seem significant, accounting for approx. 70% of the revenue - this seems high but should be validated with industry standards

Now you have the chance to compare Scandinavian Sandwiches to its competitors. Pay attention to leverage all the information provided and make 3-4 well defined statements.

d. Point out 3-4 main differences in financial performance between the company and its competitors

  • Revenue-wise Scandinavian Sandwiches is approaching its second biggest competitor
  • Scandinavian Sandwiches' cost structure and profitability are weaker in comparison to its competitors
  • The most profitable competitor has a cost structure with significantly lower fixed costs, but also two other competitors have 10% lower fixed costs in comparison to Scandinavian Sandwiches (which seems to fall directly into profitability)

In our typical cases we ask the interviewee to provide concrete recommendations to the case company's management to reflect our real-life way of working. A recommendation is a summary or an "elevator pitch" of the case study you have conducted. Now we ask you to summarize your findings in 3-4 actions that you would recommend for Scandinavian Sandwiches' management in order to improve their competitiveness and profitability.

  • Scandinavian Sandwiches should focus on continuing its growth in a more healthy manner
  • The management should analyze the company's fixed costs, benchmark with competitors in further detail and proactively seek ways to decrease these
  • Fixed costs contain items such as facilities, personnel costs (on short term), marketing, administration - the largest drivers for fixed costs should be identified and addressed
  • The marginal increase in variable costs could be addressed, for example, through better due diligence of suppliers
  • Also the recent investments should be mapped to understand impact on net income

2. Ferris Wheel: Addressing investment attractiveness

You have been hired to evaluate the feasibility of investing a total of four million euros into a brand new ferris wheel under development. In order to evaluate the attractiveness of the deal, you have been asked to determine the revenue potential, operating expenses, and payback time for the potential investment.

In this kind of a case situation, you will be expected to perform multiple step-by-step calculations based on given data to form a fact-based view on the investment opportunity at hand. Please also keep in mind that you are encouraged to ask clarifying questions and request additional information at all times during the interview. You may also round numbers to make them more manageable in your pen-and-paper calculations.

In the beginning of each case study, it is highly beneficial to approach an unfamiliar problem by listing the main elements and issues of the case in a structured manner.

Presenting a well-structured framework of the situation to your interviewer will also make it easier for him or her to understand and follow your reasoning and logic. In addition, drafting a decision tree will also help you stay on track and focus on the most important aspects of the case.

  • Pricing
    • Ticket prices
    • Price categories
  • Number of tickets sold
    • Opening hours
    • Ride duration
    • Number of cabins
    • Cabin capacity

Usually, you will be given a set of data essential to the case at this point of the interview. Keep in mind that you may take a brief moment to contemplate the information and form a hypothesis on how to proceed with the case. In addition, the interviewer may ask you to draw initial insights based on the given information.

  • You can assume that the Ferris Wheel attracts one group of VIP customers per day.
  • You can also make the assumption that 70% of regular customers are children.

Case parameters: Revenue data

In this step, you would need to calculate the maximum potential of the Ferris Wheel with full utilization rate.

Please note that in a real interview situation it is recommended to use round numbers to make the calculations easier with pen and paper.

  • Average opening hours: 8.4 hours/day = 504 minutes
  • Number of 15-minute rides per cabin per day: 506 minutes / 15 minutes = 33.7 rides per day to be rounded down to 33 full daily rides
  • Total number of 15-minute cabin rides per day: 33 rides/cabin x 30 cabins = 990 rides

Assuming the Ferris Wheel attracts one group of VIP customers per day, the total amount of daily rides decreases since the duration of a single VIP ride is twice as long as a normal ride and fits half as many people. Hence, the actual number of 15-minute cabin rides is 988 per day.

  • Daily number of regular customers: 8 customers/ride x 988 rides/day = 7 904 customers/day
  • Daily number of VIP customers: 4
  • Total number of customers per day: 7 908

In order to calculate revenue potential, you would need to include the number of customers calculated in the previous phase and the prices shown in the revenue data table.

Remember to exclude VAT (24% to be used in this case example) from the calculations.

  • Prices excluding VAT:
    • Adult: 9.7EUR (12/1.24)
    • Child: 4EUR (5/1.24)
    • VIP: 157EUR (195/1.24)
  • Daily maximum revenue potential:
    • Adults: 9.7 x 0.3 x 7 904 = 23 000EUR
    • Children: 4 x 0.7 x 7 904 = 22 000EUR
    • VIP experience: 157EUR
    • Total: 45 000EUR
  • Daily revenue potential with 10% utilization rate: 0.1 x 45 000EUR = 4 500EUR

Operating expenses refer to ongoing costs required to run a business and perform day-to-day business operations. As such, estimating operating expenses is a crucial step in evaluating investment feasibility.

In this part of the case, you could map operating expenses by thinking of concrete activities and related expenses that you would require in operating a ferris wheel on a daily basis.

  • Fixed costs
    • Land rent
    • Personnel
    • Maintenance
    • Overhead
  • Variable costs
    • Electricity

Take a look at the expense data of operating the Ferris Wheel presented to you.

  • What kind of calculations could you perform based on the numbers?
  • How would you proceed with the case? What insights can be drawn from the data?

Case parameters: Expense data

Payback time refers to the length of time required to recover the cost of an investment. In this case, you would need to calculate the time in which the initial investment of four million euros would be paid back in Ferris Wheel profits.

Please note that in real-life situations, you would usually use more advanced payback calculation methods that would take into account the time value of money in the calculations.

First, take a moment to calculate the total operating costs based on the data provided to you in the previous phase of the case.

  • Rent costs per year: 360 000EUR
  • Operating personnel costs per year: 2 persons/day x 8.4 hours/day x 20EUR/hour x 350 days/year = 120 000EUR
  • Other operating costs per year: 155 000EUR
  • Total operating costs per year: 635 000EUR

​Finally, proceed to revenue calculations to calculate the required payback time. Make sure to present your final recommendations on the feasibility of the potential investment based on fact-based analysis.

  • Revenue per year: 4 500EUR/day x 350 days/year = 1 575 000EUR/year
  • Operating margin: Revenue - Total costs = 940 000EUR
  • Payback time: Investment / Operating margin = 4 000 000EUR / 940 000EUR = 4 years

In terms of revenues, the management of Ferris Wheel could consider additional revenue sources to improve the business. In addition to the revenue generated from the rides, the management could consider adding ancillary revenue to the offering. For example, snacks, champagne, and souvenirs could be sold on the site.

In terms of costs, rent is by far the most expensive cost element unlikely to be influenced. However, Ferris Wheel management could reconsider hours of operations to decrease both fixed and variable costs. For example, could the opening hours be different during winter time to cut costs? Should the wheel be closed during daytime from Monday to Friday?

In terms of payback time, four years seems quite sensible for a 4MEUR investment. However, the given utilization rate of 10% could be questioned in the case. Is it reasonable to assume that the Ferris Wheel will operate with full capacity (i.e. all cabins carry maximum amount of customers) during 10% of the time?


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