Most Popular Financial Analyst Interview Questions and Answers

The job of a financial analyst is very important for a business. He researches all the economic trends and analyses financial data to provide valuable information for the business.

If you are a financial analyst and preparing for interviews, then you must prepare these most popular financial analyst interview questions.

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In this guide you will find:

  • Most popular financial analyst interview questions: technical
  • Commonly asked financial analyst interview questions: HR-related

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Most popular financial analyst interview questions: Technical

Q1. What is financial modeling?

This is one of the most commonly asked (and basic) financial analyst interview questions asked by the interviewers. If you are a financial analyst, then you must have a thorough knowledge of financial modeling. But presenting your knowledge in a concise manner is as important as the knowledge itself, specially in an interview room.

Possible Answer

Financial modeling is a graphical representation of a company’s finances, including the company’s earnings and expenditures. It is represented in a spreadsheet or a chart, and financial modeling helps in analyzing the financial situation of a company in order to take better financial decisions in future, or making effective financial strategies.

Q2. Which of the financial models do you find most helpful?

Here the interviewer is going a little deeper to dig in your knowledge of financial modeling. You can mention a few names that you are well-acquainted with, and then if the interviewer asks to explain one or more of them in detail, you can do that.

Some of the most popular financial models are:
  • Credit Rating Model
  • DFC (Discounted Cash Flow) model
  • Merger & Acquisition Model
  • Three Statement Model

Q3. What is Cash Flow Statement?

Be prepared to expect one question about the Cash Flow Statement. Having an in-depth knowledge of Cash Flow Statement will be necessary to crack the financial analyst interview.

Cash Flow Statement is a statement in financial accounting that represents the relationship between income and cash/ cash equivalent.

Q4. What is the best way to evaluate a company’s stock?

This is one of the trickiest of all the financial analyst interview questions because there is no right or wrong answer. You have to go with your instinct and depend on your knowledge of finance.

Possible Answer

Well, I think no single way can be termed as the best way to evaluate a company’s stock, you have to depend on multiple ways to decide that, such as: P/E (price/ earnings) ratio, dividend yield, price to sales etc.

Q5. What is working capital?

Working capital is: Current Assets minus Current Liabilities.

More Financial Analyst Interview Questions: Technical

  1. Why is the quick ratio lower than the current ratio?
  2. Explain debt vs equity.
  3. What is the difference between a journal and a ledger?
  4. Explain NVP and its usage.
  5. What is goodwill?
  6. Explain the DuPont model.
  7. What is the formula of basic earnings per share?
  8. What is the capital structure?
  9. Which programs do you commonly use for preparing charts, spreadsheets or illustrated technical graphs?
  10. What is the difference between P&L account and income and expenditure statement?
  11. Explain variance analysis with a real-life example.
  12. Where do you see yourself in 5 years?

Commonly asked financial analyst interview questions: HR-related

Q1. What do you know about our company?

Before attending an interview, visit the company website and collect as much information about the company as possible. Most important things to know are: people holding important positions in the company, the type of work the company does, the size of the company, the workforce, company’s vision and mission, etc. You can also visit the LinkedIn pages of the important persons of that company to collect additional information.

Q2. Why did you choose to become a financial analyst?

There is no particular right answer for this question, so describing your personal reasons, choices and preferences for becoming a financial analyst will work best while answering this question.

Q3. What is your expected salary?

Negotiating salary can be tricky. Talk to your seniors or mentors, if any, to know about the standard salary for your qualification and experience. Remember, finding the right balance is necessary. You don’t get what you don’t ask for, so if you place yourself too low, you will be at a loss. Again, if your expectations are too high, the company will move on to someone else. The best possible way out is: don’t quote a figure to them unless absolutely forced to, otherwise, just go with “I will accept the standard payment”, and let THEM quote a figure. If their quoted figure is matching or exceeding your expectations, then congratulations! And if their quote is too low, you can always start a negotiation with “I think I will be more comfortable if it was so and so…”.

Q4. What does it take to become a good financial analyst?

Possible Answer

A person needs a lot of special skills and qualities to become a good financial analyst, such as:

  • Attention to details
  • Thorough technical knowledge
  • Keeping oneself updated with the current trends
  • Critical thinking and analyzing skills
  • Patience and Hard work, etc.

Do you have any questions for us?

The answer should always be ‘Yes’. Learn which questions to ask the interviewers, and in which stage, here!

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