What are the most important finance interview questions to prepare for?

1 Accounting Basics

Accounting is the language of finance, so it's essential to understand the basic concepts and principles that underlie financial statements, ratios, and analysis. Common accounting questions you may need to answer include: what are the three main financial statements and how are they linked? What is the difference between accrual and cash accounting? How do you calculate net income, EBIT, EBITDA, and free cash flow? What are the main components of working capital and how do they affect cash flow? Additionally, you should be able to explain how to account for depreciation, amortization, impairment, and goodwill. To answer these questions effectively, you should review the fundamentals of accounting and be familiar with the accounting standards and policies of the industry or sector you are applying for, as well as how they influence a company's financial performance and valuation.

2 Financial Valuation

Financial valuation is the process of estimating the value of a company, an asset, or a project based on its expected future cash flows, risk, and growth potential. To answer questions such as what are the main valuation methods and how do you calculate the weighted average cost of capital (WACC) and the terminal value, you should have a solid understanding of the theory and practice of financial valuation. Additionally, you should be able to perform a discounted cash flow (DCF) analysis with key assumptions and sensitivities, compare the value of a company using multiples and comparable transactions, as well as adjust the value for non-controlling interests, minority stakes, synergies, and options. Moreover, you should be able to justify your assumptions and demonstrate your critical thinking and problem-solving skills.

3 Financial Markets and Instruments

Financial markets and instruments are the platforms and tools that facilitate the exchange of money, securities, derivatives, and other financial assets and liabilities. You should have a comprehensive understanding of the structure and functioning of financial markets and instruments to answer questions such as what are the main types of financial markets and instruments, how do you price a bond, stock, option or swap, what are the sources and drivers of risk and return in financial markets, and how do you measure and manage market risk, credit risk, liquidity risk, and operational risk. Additionally, it is important to be aware of current trends in the financial industry as they can impact market conditions and opportunities.

4 Behavioral Questions

Behavioral questions are designed to assess your personality, motivation, and fit for the role and the organization. Questions such as why you want to work in finance and for this company, what your strengths and weaknesses are, how you handle stress, pressure, and deadlines, how you work in a team and deal with conflicts, and how you handle ethical dilemmas are common. To answer these questions effectively, it is recommended to use the STAR method. You should be able to provide specific examples from your past experiences that demonstrate your skills, achievements, and values while demonstrating enthusiasm, confidence, and honesty. It is also important to align your answers with the company's culture and goals.

5 Technical Skills Questions

Technical skills questions are meant to assess your proficiency and expertise in using various software, tools, and methods that are relevant to the finance job. You may be asked how proficient you are with Excel, PowerPoint, and Word, as well as how you use formulas, functions, macros, and shortcuts in Excel. Additionally, you may be asked about your experience with creating financial models, charts, and reports in PowerPoint and Word. Other questions may include your familiarity with software or tools such as Bloomberg, SQL, Python, or R; as well as your knowledge of data analysis, visualization, and automation techniques for enhancing finance work. To answer these questions effectively, you should demonstrate your technical skills by providing examples of your work or performing tasks on the spot. Furthermore, you should emphasize your learning ability and willingness to adapt to new technologies and systems. Lastly, mention any certifications, courses, or projects that showcase your technical skills.

6 Brainteasers and Case Studies

Brainteasers and case studies are often used to challenge your logic, creativity, and analytical skills. These can be quantitative or qualitative, ranging from simple puzzles to complex business scenarios. For example, you may have to answer questions like: how many golf balls can fit in a Boeing 747? Or how would you value a company that produces only one product: a pen? Additionally, you may have to advise a client who wants to enter a new market or launch a new product, analyze the impact of a merger on a company's financials and strategy, or assess the feasibility and profitability of a project or investment. To answer these questions, it is important to follow a structured approach that breaks down the problem into smaller parts, makes reasonable assumptions, and uses relevant data and information. You should also think out loud and explain your reasoning and calculations. It is also helpful to be prepared for curveballs, follow-ups, and feedback from the interviewer.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?