Question 1

Walk me through the three financial statements.

Accepted Answer

The income statement shows revenue, expenses and profit over a period; the balance sheet shows assets, liabilities and equity at a point in time; the cash flow statement shows cash from operations, investing and financing.

Question 2

If depreciation rises by 100, what happens to the three statements?

Accepted Answer

Operating profit falls by 100; net income falls by 100 times (1 - tax rate). On the cash flow statement, depreciation is added back, so cash rises by the tax saved. On the balance sheet, fixed assets fall by 100, cash rises by the tax saving, and retained earnings fall by the drop in net income - so it balances.

Question 3

How do you value a company?

Accepted Answer

Intrinsic value through a DCF; relative value through comparable company multiples and precedent transactions. Use more than one and explain why the results differ.

Question 4

Walk me through a DCF.

Accepted Answer

Project free cash flows for 5-10 years, estimate a terminal value (perpetuity growth or exit multiple), discount everything at WACC, sum to get enterprise value, then subtract net debt for equity value.

Question 5

Enterprise value vs equity value?

Accepted Answer

Equity value belongs to shareholders (market cap for listed firms). Enterprise value is the value of the whole business to all capital providers: equity plus debt minus cash, roughly.

Question 6

What does EBITDA show, and what does it miss?

Accepted Answer

It approximates operating profitability before capital structure and non-cash charges, useful for comparing companies. It ignores capital spending, working capital and interest - which can hide cash problems.

Question 7

What is working capital, and why does it matter?

Accepted Answer

Current assets minus current liabilities - money tied up in day-to-day operations. Rising receivables or inventory can consume cash even when profits grow.

Question 8

Which ratios would you check first for a manufacturing company?

Accepted Answer

Margins (gross, EBITDA), return on capital employed, debt-to-equity and interest coverage, inventory and receivable days, and asset turnover - compared with peers and past years.

Question 9

Pitch me a stock.

Accepted Answer

The company in one line, two or three reasons it's under- or overvalued backed by numbers, the key risks, and what would make you change your mind. Use a company you genuinely follow.

Question 10

How do you build a sensitivity table in Excel?

Accepted Answer

Use a data table with two inputs (such as WACC and terminal growth) on the axes and the output (valuation) in the corner, so you can see how much the answer depends on assumptions.

Question 11

What qualifications help for financial analyst roles?

Accepted Answer

A commerce, finance or MBA background is common; CFA levels, CA or financial modelling courses help. Strong Excel and accounting matter in every case.

Question 12

Do financial analyst interviews include case studies?

Accepted Answer

Often - a modelling test in Excel, a company analysis or a short case on a business decision.

Question 13

How should freshers prepare?

Accepted Answer

Master the three statements and how they link, practise a simple DCF, learn key ratios, and follow two or three companies closely enough to discuss them.

Financial analyst interview questions and answers

What to revise before the interview

1.Walk me through the three financial statements.

2.If depreciation rises by 100, what happens to the three statements?

3.How do you value a company?

4.Walk me through a DCF.

5.Enterprise value vs equity value?

6.What does EBITDA show, and what does it miss?

7.What is working capital, and why does it matter?

8.Which ratios would you check first for a manufacturing company?

9.Pitch me a stock.

10.How do you build a sensitivity table in Excel?

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