What to expect in a finance interview
When it comes to interviews, the finance industry is notorious for being tough. Employers want to see that you have the skills and knowledge to handle complex financial problems.
There are two main categories of finance interview questions you will face:
- Behavioral/fit questions - interview questions that assess your personality and traits based on how you would handle different situations.
- Technical questions - interview questions that assess your knowledge of finance
We’ve put this useful guide together to prepare you for the most commonly asked financial interview questions. Here’s what you can expect.
Financial interviews: what to expect
Financial interviews typically last 40-60 minutes and are a crucial stage of the recruitment process. This is where an interviewer assesses whether a candidate is suitable for the role they’ve applied for.
The interviewer will typically ask questions about your education, experience, and skills. They may also ask about your motivation for pursuing a career in finance. The interviewer will use this information to determine if you have the ability to perform the duties of a financial analyst or other financial roles.
Preparing for the most commonly asked interview questions can help you be one step ahead.
10 Finance interview questions you may be asked
1. What are the ways you can value a company?
To value a company, you must first understand what types of values the company produces. The most common way to value a company is by its market capitalization, which is the current share price multiplied by the number of shares outstanding.
However, this method does not take into account the company’s debt or other liabilities.
Other ways to value a company include its net asset value, earnings power value, and liquidation value. Each of these methods has its own strengths and weaknesses, so it is important to understand all of them when preparing to answer this question.
2. Talk me through a cash flow statement
When you are interviewing for a position you may also be asked questions about your finance knowledge. One such question might be, “Walk me through a cash flow statement.”
To answer this question, you will need to have a general understanding of cash flow statements and how they work. A cash flow statement is a financial statement that provides a snapshot of a company’s inflows and outflows of cash. It can be used to assess a company’s financial health and stability.
There are three types of cash flows that are typically reported on a cash flow statement: operating, investing, and financing. Operating activities include things like revenue and expenses. Investing activities include things like purchasing assets or selling investments. Financing activities include things like issuing new debt or repaying existing debt.
3. Can a company show positive cash flow but be in grave trouble?
Yes, a company can show positive cash flows but be in grave trouble. The key is to understand how to read and analyze a company’s financial statements. Here are a few red flags to look for:
High levels of debt: This can be a sign that the company is struggling to pay off its loans.
Declining sales: This could mean that the company’s products are no longer in demand.
High levels of inventory: This could indicate that the company is having difficulty selling its products.
If you see any of these warning signs, it’s important to dig deeper and ask questions about the company’s financial health.
4. How can a company show positive net income but go bankrupt?
There are several reasons why a company might show positive net income but go bankrupt. One reason is that the company may have taken on too much debt. Another reason could be that the company has been mismanaged and has not been able to generate enough revenue to cover its expenses.
If you are asked this question in an interview, it is important to remember that there can be a number of reasons why this might happen.
Try to think of specific examples of companies that have gone through this process. This will show that you have thought about the question and can provide concrete examples.
5. What do you know about capital markets?
When it comes to interviews, being asked about your knowledge of capital markets is not uncommon.
Capital markets are where businesses go to raise money by selling securities. The securities can be things like stocks, bonds, or other investments. The key thing to remember is that capital markets are where businesses go to get funding from investors.
There are two main types of capital markets: primary and secondary. The primary market is where businesses first sell their securities to investors. The secondary market is where investors trade securities with each other after they’ve already been issued.
1. Tell me about a time when you had to analyze and present complex data
When you’re interviewing for a finance-related position, the interviewer will likely ask you to describe a time when you had to analyze and present complex data. Here’s how to answer this question so that you impress the interviewer and improve your chances of getting the job.
The key is to be prepared with a specific example from your past experiences.
Think about a time when you were required to analyze data to make a presentation. What was the data? How did you go about analyzing it? What conclusions did you reach? Be sure to focus on your analytical skills rather than on the actual content of the presentation.
Finally, practice your answer out loud before the interview so that you sound confident and polished when asked this question.
2. What is your experience with financial modeling?
More and more job seekers are being asked to complete a financial modeling test as part of the interview process so this is a good area to prepare for when it comes to an interview.
Financial modeling is the process of creating a summary of a company’s financial performance using historical data. This information is then used to forecast future income and expenses. Financial models are usually created in Excel, and the most common types of models include three-statement models, discounted cash flow (DCF) models, and merger & acquisition (M&A) models.
If you’re applying for a job that requires financial modeling skills, be prepared to answer questions about your experience with Excel and your comfort level working with numbers. The interviewer may also ask you to walk through a specific type of model that they want you to create during the interview.
3. Describe a situation where you had to make a difficult financial decision
The best way to proceed with this question is to have a few examples where you’ve had to make a difficult financial decision - here, the interviewer is assessing your logical reasoning and situational judgment skills.
Using the STAR method can help you structure your answer to these types of questions.
Demonstrating that you weighed your options up and considered all of the possible outcomes is the best way to answer this question.
4. Tell me about a time when you had to lead or work on a project as part of a team
When it comes to leading or working on a project as part of a team, financial interviewers often want to know about your ability to work with others.
They may ask you questions about a time when you had to lead or work on a project as part of a team.
First, think of an example where you were successful in leading or working on a project as part of a team. This will show the interviewer that you have experience with this type of situation.
Next, describe the situation in detail. Include information such as what your role was, what the goals of the project were, and how you worked with the other members of the team.
Finally, explain what made the experience successful. Was it your ability to motivate others? Your creativity in solving problems? Your knowledge of the subject matter?
5. Why are you interested in working in finance?
When interviewing for a position in finance, you may be asked why you are interested in working in this field. This is an opportunity to show your passion for the field.
First, think about what drew you to finance in the first place. Was it the challenge of working with numbers and solving complex problems? Or was it the opportunity to help businesses and individuals make sound financial decisions? Whatever your reason, be sure to mention it in your answer.
In addition, highlight any relevant experience you have that makes you a good fit for finance. For example, if you have experience managing money or working with spreadsheets and financial software. Again, stressing how this experience has prepared you to work in finance will show that you’re serious about the role.
As the job market continues to be competitive, nailing the interview is more important than ever.
When it comes to interviews, preparation is key. Spend some time researching the company you’re interviewing with and familiarizing yourself with their financial reports. This will not only show that you’re invested in the role, but it will also give you something to talk about during the interview.
In addition to being prepared, it’s also important to be confident. Remember that you are the best candidate for the job and believe in yourself. This will come across in your interview and give you an edge over other candidates.