Guide to Finance Interviews
1. What is the difference between the Income Statement and the Statement of
Cash Flows?
2. What is the link between the Balance Sheet and the Income Statement?
3. What is the link between the Balance Sheet and the Statement of Cash Flows?
4. What is EBITDA?
5. Say you knew a company’s net income. How would you figure out its
“free cash flow”?
6. Walk me through the major line items on a Cash Flow statement.
7. What happens to each of the three primary financial statements when
you change a) gross margin b) capital expenditures c) any other change?
8. How do you value a company?
9. What is the formula for the Capital Asset Pricing Model?
10. Why might there be multiple valuations for a single company?
11. How do you calculate the terminal value of a company?
12. What are the different multiples that can be used to value a company?
13. How do you get the discount rate for an all-equity firm?
14. How much would you pay for a company with $50 million in revenue
and $5 million in profit?
15. What is the difference between the APV and WACC?
16. How would you value a company with no revenue?
17. What is Beta?
18. How do you unlever a company’s Beta?
19. Name three companies that are undervalued and tell me why you
think they are undervalued.
1 “Guide to Finance Interviews” note is developed by Mr.M.Chandra Shekar, Assistant
Professor of Finance and the same circulated as a reading material for “Financial
Modeling” course at Institute of Public Enterprise, Hyderabad.
20. Walk me through the major items of an Income Statement.
21. Which industries are you interested in? What are the multiples that
you use for those industries?
22. Is 10 a high P/E ratio?
23. Describe a typical company's capital structure.
24. What kind of stocks would you issue for a startup?
25. When should a company buy back stock?
26. When should a company issue stock rather than debt to fund its
operations?
27. Why would an investor buy preferred stock?
28. Why would a company distribute its earnings through dividends to
common stockholders?
29. What stocks do you like?
30. What did the BSE sensex close at yesterday?
31. Why did the stock price of XYZ company decrease yesterday when it
announced increased quarterly earnings?
32. Can you tell me about a recent IPO that you have followed?
33. Describe a recent M&A transaction that you’ve read about.
34. What were the reasons behind an M&A transaction you’ve read about? Does
that transaction make sense?
35. Are most mergers stock swaps or cash transactions and why?
36. What is a dilutive merger?
37. What is an accretive merger?
38. Can you name two companies that you think should merge?
39. Why do you want to do investment banking/investment management/
Whatever career you plan to pursue?
2 “Guide to Finance Interviews” note is developed by Mr.M.Chandra Shekar, Assistant
Professor of Finance and the same circulated as a reading material for “Financial
Modeling” course at Institute of Public Enterprise, Hyderabad.
40. What exactly do investment bankers (or investment managers, etc.) do?
41. Here’s a whiteboard. Stand in front of it and present a chapter from
your favorite finance textbook. You have five minutes.
42. Walk me through your resume.
43. Why should we hire you?
44. What types of activities did you pursue while in college?
45. Why are you applying to this firm?
46. Give me an example of a project that you’ve done that involved heavy
analytical thinking.
47. What is your favorite web site?
48. Tell me about the stock price of a company in your prior line of Work?
49. Give me an example of a time you worked as part of a team.
50. What is the most striking thing you’ve read recently in The Wall Street Journal?
51. Describe a project you have worked on that you enjoyed.
52. Can you give me an example of an experience of failure?
53. You don’t seem like you are a very driven person. How will you be able to
handle a job in banking?
54. Tell me about an accomplishment that you are proud of.
55. Can you tell me about a time when you handled many things at the same
time?
56. What is a hedge fund?
3 “Guide to Finance Interviews” note is developed by Mr.M.Chandra Shekar, Assistant
Professor of Finance and the same circulated as a reading material for “Financial
Modeling” course at Institute of Public Enterprise, Hyderabad.
