Finance Interview Questions:

Finance is a vast field. The interview questions will depend on what the prospective employer is into or what will be your probably responsibilities. a. Some of the probable general questions can be as follows: Explain various financial ratios. How and interpret them? What is Time value of money? b. How inflation impacts capital budgeting?

c. d. e. f. g. h.

What are Derivatives and how they are useful? How to determine exchange rate and cross rates in foreign currency transitions? You may be given two way quotes and asked to calculate the resultant rate. What are hedging and how they are useful? Can you explain a couple of example? What are amalgamation, absorption, reconstruction and divestment? What are the benefits? And how are the different for each other? What refers to various schemes of offering an equity stake by a Company to its employees? What are ESOPs? How many types of ESOPs are their and the differences? Explain if they have any adverse impact on the financial statements of the company.

i. What is Financial Risk? What can the finance manager do about such risk? j. What is Service Tax? k. Can you briefly explain the Fringe Benifit Tax( FBT)? l. What is Securities Transaction Tax- (STT)? m. Why Investment Banking / Private Equity/ Private Client Services? n. How do you value a company (particular to investment banking / private equity etc)? o. What qualities do you think are important for this industry? Do you possess those
qualities?

p. q. r. s.

Why would two companies merge? What major factors drive mergers and acquisitions? Tell me three items on the front page of today's Economic Times / Financial Express etc? Why might a company choose debt over equity financing? Where is our firm's stock trading?

Top 50 Interview Questions and their answers for Freshers

( Q1 to 10)1. Tell me about yourself The most often asked question in interviews. You need to have a short statement prepared in your mind. Be careful that it does not sound rehearsed. Limit it to work-related items unless instructedotherwise. Talk about things you have done and jobs you have held that relate to the position youare interviewing for. Start with the item farthest back and work up to the present. 2. Why did you leave your last job? Stay positive regardless of the circumstances. Never refer to a major problem with managementand never speak ill of supervisors, co-workers or the organization. I f you do, you will be the onelooking bad. Keep smiling and talk about leaving for a positive reason such as an opportunity, achance to do something special or other forward-looking reasons. 3. What experience do you have in this field? Speak about specifics that relate to the position you are applying for. If you do not have specificexperience, get as close as you can. 4. Do you consider yourself successful? You should always answer yes and briefly explain why. A good explanation is that you have setgoals, and you have met some and are on track to achieve the others. 5. What do co-workers say about you? Be prepared with a quote or two from co-workers. Either a specific statement or a paraphrase willwork. Jill Clark, a co-worker at Smith Company, always said I was the hardest workers she had ever known. It is as powerful as Jill having said it at the interview herself. 6. What do you know about this organization? This question is one reason to do some research on the organization before the interview. Find outwhere they have been and where they are going. What are the current issues and who are themajor players? 7. What have you done to improve your knowledge in the last year?

Try to include improvement activities that relate to the job. A wide variety of activities can bementioned as positive self-improvement. Have some good ones handy to mention.

8. Are you applying for other jobs? Be honest but do not spend a lot of time in this area. Keep the focus on this job and what you cando for this organization. Anything else is a distraction. 9. Why do you want to work for this organization? This may take some thought and certainly, should be based on the research you have done on theorganization. Sincerity is extremely important here and will easily be used. Relate it to your long-term career goals. 10. Do you know anyone who works for us? Be aware of the policy on relatives working for the organization. This can affect your answer eventhough they asked about friends not relatives. Be careful to mention a friend only if they are wellthought of.

11. What kind of salary do you need? A loaded question. A nasty little game that you will probably lose if you answer first. So, do notanswer it. Instead, say something like, that,s a tough question. Can you tell me the range for thisposition? In most cases, the interviewer, taken off guard, will tell you. If not, say that it can dependon the details of the job. Then give a wide range. 12. Are you a team player? You are, of course, a team player. Be sure to have examples ready. Specifics that show you oftenperform for the good of the team rather than for yourself is good evidence of your team attitude. Donot brag; just say it in a matter-of-fact tone? This is a key point. 13. How long would you expect to work for us if hired? Specifics here are not good. Something like this should work: I,d like it to be a long time. Or As longas we both feel I,m doing a good job. 14. Have you ever had to fire anyone? How did you feel about that? This is serious. Do not make light of it or in any way seem like you like to fire people. At the sametime, you will do it when it is the right thing to do. When it comes to the organization versus theindividual who has created a harmful situation, you will protect the organization. Remember firing isnot the same as layoff or reduction in force. 15. What is your philosophy towards work?

The interviewer is not looking for a long or flowery dissertation here. Do you have strong feelingsthat the job gets done? Yes. That,s the type of answer were that works best here. Short andpositive, showing a benefit to the organization. 16. If you had enough money to retire right now, would you? Ads not by this site

Answer yes if you would. But since you need to work, this is the type of work you prefer. Do not sayyes if you do not mean it. 17. Have you ever been asked to leave a position? If you have not, say no. If you have, be honest, brief and avoid saying negative things about thepeople or organization involved. 18. Explain how you would be an asset to this organization? You should be anxious for this question. It gives you a chance to highlight your best points as theyrelate to the position being discussed. Give a little advance thought to this relationship. 19. Why should we hire you? Point out how your assets meet what the organization needs. Do not mention any other candidatesto make a comparison. 20. Tell me about a suggestion you have made? Have a good one ready. Be sure and use a suggestion that was accepted and was then consideredsuccessful. One related to the type of work applied for is a real plus. 21. What irritates you about co-workers? This is a trap question. Think real hard but fail to come up with anything that irritates you. A shortstatement that you seem to get along with folks is great. 22. What is your greatest strength? Numerous answers are good, just stay positive. A few good examples: Your ability to prioritize, Your problem-solving skills, Your ability to work under pressure, Your ability to focus on projects, Your professional expertise, Your leadership skills, Your positive attitude 23. Tell me about your dream job.

Stay away from a specific job. You cannot win. If you say the job you are contending for is it, youstrain credibility. If you say another job is it, you plant the suspicion that you will be dissatisfied withthis position if hired. The best is to stay genetic and say something like: A job where I love the work,like the people, can contribute and can,t wait to get to work. 24. Why do you think you would do well at this job? Give several reasons and include skills, experience and interest. 25. What are you looking for in a job? Stay away from a specific job. You cannot win. If you say the job you are contending for is it, youstrain credibility. If you say another job is it, you plant the suspicion that you will be dissatisfied withthis position if hired. The best is to stay genetic and say something like: A job where I love the work,like the people, can contribute and can,t wait to get to work. 26. What kind of person would you refuse to work with? Do not be trivial. It would take disloyalty to the organization, violence or lawbreaking to get you toobject. Minor objections will label you as a whiner. 27. What is more important to you: the money or the work? Money is always important, but the work is the most important. There is no better answer. 28. What would your previous supervisor say your strongest point is?

There are numerous good possibilities: Loyalty, Energy, Positive attitude, Leadership, Team player,Expertise, Initiative, Patience, Hard work, Creativity, Problem solver 29. Tell me about a problem you had with a supervisor? Biggest trap of all. This is a test to see if you will speak ill of your boss. If you fall for it and tell abouta problem with a former boss, you may well below the interview right there. Stay positive anddevelop a poor memory about any trouble with a supervisor. 30. What has disappointed you about a job? Don,t get trivial or negative. Safe areas are few but can include: Not enough of a challenge. Youwere laid off in a reduction Company did not win a contract, which would have given you moreresponsibility 31. Tell me about your ability to work under pressure?

You may say that you thrive under certain types of pressure. Give an example that relates to thetype of position applied for. 32. Do your skills match this job or another job more closely? Probably this one. Do not give fuel to the suspicion that you may want another job more than thisone. 33. What motivates you to do your best on the job? This is a personal trait that only you can say, but good examples are: Challenge, Achievement andRecognition. 34. Are you willing to work overtime? Nights? Weekends? This is up to you. Be totally honest. 35. How would you know you were successful on this job? Several ways are good measures: You set high standards for yourself and meet them. Your outcomes are a success. Your boss tells you that you are successful. 36. Would you be willing to relocate if required? You should be clear on this with your family prior to the interview if you think there is a chance itmay come up. Do not say yes just to get the job if the real answer is no. This can create a lot of problems later on in your career. Be honest at this point and save yourself future grief.

COMMON FINANCE INTERVIEW QUESTIONS (AND ANSWERS) Before we get to accounting questions, here are some interview best practices to keep in mind when getting ready for the big day. 1. Be prepared for technical questions. Many students erroneously believe that if they are not finance/business majors, then technical questions do not apply to them. On the contrary, interviewers want to be assured that students going into the field are committed to the work theyll be doing for the next few years, especially as many finance firms will devote considerable resources to mentor and develop their new employees. 2. One recruiter weve spoken to said while we do not expect liberal arts majors to have a deep mastery of highly technical concepts, we do expect them to understand the basic accounting and finance concepts as they relate to investment banking. Someone who

cant answer basic questions like walk me through a DCF has not sufficiently prepared for the interview, in my opinion. 3. Another added, Once a knowledge gap is identified, its typically very difficult to reverse the direction of the interview. 4. Keep each of your answers limited to 2 minutes. Longer answers may lose an interviewer, while giving them additional ammunition to go after you with more complicated question on the same topic. 5. Its ok to say I dont know a few times during the interview. If interviewers think that youre making up answers, theyll continue probing you further, which will lead to more creative answers, which will lead to more complicated questions and a slow realization by you that interviewer knows that you dont really know. This will be followed by uncomfortable silence. And no job offer. NOW ON TO ACCOUNTING QUESTIONS Accounting is the language of business, so dont underestimate the importance of accounting questions. Some are easy, some are more challenging, but of all of them allow interviewers to gauge your knowledge level without the need to ask more complex valuation/finance questions.Below we have selected most common accounting questions you should expect to see during the recruiting process. Q: Why do capital expenditures increase assets (PP&E), while other cash outflows, like paying salary, taxes, etc., do not create any asset, and instead instantly create an expense on the income statement that reduces equity via retained earnings? A: Capital expenditures are capitalized because of the timing of their estimated benefits the lemonade stand will benefit the firm for many years. The employees work, on the other hand, benefits the period in which the wages are generated only and should be expensed then. This is what differentiates an asset from an expense. Q: Walk me through a cash flow statement. A. Start with net income, go line by line through major adjustments (depreciation, changes in working capital and deferred taxes) to arrive at cash flows from operating activities.

Mention capital expenditures, asset sales, purchase of intangible assets, and purchase/sale of investment securities to arrive at cash flow from investing activities. Mention repurchase/issuance of debt and equity and paying out dividends to arrive at cash flow from financing activities. Adding cash flows from operations, cash flows from investments, and cash flows from financing gets you to total change of cash. Beginning-of-period cash balance plus change in cash allows you to arrive at end-ofperiod cash balance.

Q: What is working capital?

A: Working capital is defined as current assets minus current liabilities; it tells the financial statement user how much cash is tied up in the business through items such as receivables and inventories and also how much cash is going to be needed to pay off short term obligations in the next 12 months. Q: Is it possible for a company to show positive cash flows but be in grave trouble? A: Absolutely. Two examples involve unsustainable improvements in working capital (a company is selling off inventory and delaying payables), and another example involves lack of revenues going forward.in the pipeline Q: How is it possible for a company to show positive net income but go bankrupt? A: Two examples include deterioration of working capital (i.e. increasing accounts receivable, lowering accounts payable), and financial shenanigans. Q: I buy a piece of equipment, walk me through the impact on the 3 financial statements A: Initially, there is no impact (income statement); cash goes down, while PP&E goes up (balance sheet), and the purchase of PP&E is a cash outflow (cash flow statement) Over the life of the asset: depreciation reduces net income (income statement); PP&E goes down by depreciation, while retained earnings go down (balance sheet); and depreciation is added back (because it is a non-cash expense that reduced net income) in the cash from operations section (cash flow statement). Q: Why are increases in accounts receivable a cash reduction on the cash flow statement? A: Since our cash flow statement starts with net income, an increase in accounts receivable is an adjustment to net income to reflect the fact that the company never actually received those funds. Q: How is the income statement linked to the balance sheet? A: Net income flows into retained earnings. Q: What is goodwill? A: Goodwill is an asset that captures excess of the purchase price over fair market value of an acquired business. Lets walk through the following example: Acquirer buys Target for $500m in cash. Target has 1 asset: PPE with book value of $100, debt of $50m, and equity of $50m = book value (A-L) of $50m.

Acquirer records cash decline of $500 to finance acquisition Acquirers PP&E increases by $100m Acquirers debt increases by $50m Acquirer records goodwill of $450m

Q: What is a deferred tax liability and why might one be created? A: Deferred tax liability is a tax expense amount reported on a companys income statement that is not actually paid to the IRS in that time period, but is expected to be paid in the future. It arises because when a company actually pays less in taxes to the IRS than they show as an expense on their income statement in a reporting period. Differences in depreciation expense between book reporting (GAAP) and IRS reporting can lead to differences in income between the two, which ultimately leads to differences in tax expense reported in the financial statements and taxes payable to the IRS. Q: What is a deferred tax asset and why might one be created? A: Deferred tax asset arises when a company actually pays more in taxes to the IRS than they show as an expense on their income statement in a reporting period.

Differences in revenue recognition, expense recognition (such as warranty expense), and net operating losses (NOLs) can create deferred tax assets.

This is for a job interview with Farmers insurance I need the answer to: Tell us why we should invest our capital into your business? I need the answer to this question: Why do you think you would be a good canadiate for this position? why we should invest our capital into your business? Very broadly the answer is going to be because the business will generate a high return. But this is a very broad (and likely insufficient answer). To effectively answer this question, you need to qualify some things specifically, what is the business? Is it an early stage, growth stage, or mature stage company? What industry does it operate in? Why does it need capital? The other side of the question is about the investor? Who is the investor? What is the investors investment horizon, risk tolerances, and objectives? Those are the questions you will want to ask (if it wasnt already clear from the question) before diving in and providing an answer. For example, and early stage angel investor may be far less interested in historical returns on invested capital and growth rates than more qualitative elements of the firm, the addressable market, etc. Meanwhile, a lender is far more interested in things like interest coverage, and various other credit statistics.

Why do you think you would be a good candidate for this position? This is another extremely broad question and one that you will almost certainly get at any place you interview. It is completely open ended, and simply an opportunity to tell your story. What sets you apart from other candidates. For an investment banking position, for example, this is an opportunity for prospective analysts and associates to talk about and identify specific examples and anecdotes that highlight how they work well in teams, are willing to work extremely hard and long hours, and are passionate about finance and working with both numbers and people. Could you help me with the questions why does a future or position in finance/treasury excite you? I am a liberal arts major, fresh out of school, so I dont know what to say! I have a question that was asked in one of the interview. Can the customer have both debit and a credit note.. if yes how? Also the 1st question they ask in the interview would be whts the diff bw debit and credit . As i am from a science background i cant analyse the basic transaction and answer for which i need to learn basic .. How do v analyse simple journal account.. Please help me . thnx a lot I have few interviews in the line.. Can you mail or post few more questions related to accounts/equity/derivatives/banking?? Pls do it ASAP Can you mail or post few more questions related to accounts. Commonly asked question in interviews