The investment banking interview question we’re going to go over today is “How do you project revenue?” Generally speaking, there are three ways to project revenue. Let’s take a look at how you might deliver this answer in a real interview.
“In general, there are three different ways to project revenue. The first way is to project revenue using a growth rate. We can take last year’s revenue and increase it by the growth rate.
The second way to project revenue is through a bottom-up revenue build. We would project out the different revenue streams individually and then add them together to calculate the future total revenue.
And lastly, we can project revenue through a top-down revenue build. Using this method, we can multiply the total market size and the approximate percentage share that this company can capture, and this will give us the projected future revenue.
So these are the three different ways we can we project revenue.”
That’s how you can answer this question: “how do you project revenue”. You can also talk about factors that you would take into consideration when you make your forecast, but that’s generally not required.