Financial Analyst Interview Questions

10 Financial
Analyst
Interview
Question
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www.harshithamanjunath37.com Harshitha Manjuanth

Why did you choose to be a
financial analyst?
Be honest and concise about your

reasons for choosing this career path.
Highlight your passion for numbers,
analytical skills, and desire to help
businesses make informed financial
decisions.
Provide specific examples or
experiences that demonstrate your
interest in financial analysis, such as
relevant coursework, internships, or
projects.
Harshitha Manjuanth
What is a cash flow statement?
Explain the purpose of a cash flow
statement in simple terms,
emphasizing its role in tracking the
movement of cash in and out of a
company.
Break down the three main sections of
the cash flow statement (operating,
investing, and financing activities) and
briefly describe what each section
represents.
Use examples or analogies to make
the concept more relatable, such as
comparing it to a personal budget or
checking account statement.
Harshitha Manjuanth
Explain financial modeling?
Define financial modeling as the

process of creating mathematical
representations of financial situations or
forecasts using spreadsheets and
formulas.
Highlight the importance of financial
modeling in decision-making, strategic
planning, and forecasting.
Mention any relevant skills or
experiences you have with financial
modeling tools or techniques, such as
Excel, Python, or statistical analysis.
Harshitha Manjuanth
Walk me through a discounted cash
flow (DCF) analysis and explain
what it’s used for.
Start by explaining the basic concept of
a DCF analysis, which involves
estimating the present value of future
cash flows.
Break down the steps involved in a DCF
analysis, including forecasting cash
flows, selecting an appropriate discount
rate, and calculating the present value.
Discuss the significance of DCF analysis
in valuation, investment decision-
making, and comparing investment
opportunities.
Harshitha Manjuanth
If You Could Only Pick One
Financial Statement to Make a
Decision on a Company, What
Would You Pick?
Explain your rationale for choosing the
cash flow statement over other
financial statements.
Emphasize the importance of cash flow
in assessing a company's liquidity,
financial health, and ability to generate
cash.
Discuss how analyzing the cash flow
statement can provide insights into a
company's operational efficiency,
investment priorities, and financial
stability.
Harshitha Manjuanth
What is EBITDA?
Define EBITDA (Earnings Before

Interest, Taxes, Depreciation, and
Amortization) as a measure of a
company's operating performance.
Explain that EBITDA represents the
company's earnings before accounting
for non-operating expenses and non-
cash items.
Highlight the significance of EBITDA as
a metric for assessing a company's
profitability and operational efficiency.
Harshitha Manjuanth
What factors influence a company's
cost of capital?
Identify key factors such as interest

rates, market risk, inflation, and the
company's capital structure.
Explain how each factor affects the
cost of debt and equity capital.
Discuss the importance of assessing
the company's risk profile and market
conditions in determining the cost of
capital.
Harshitha Manjuanth
What is the significance of the time
value of money in financial
analysis?
Emphasize that the time value of
money recognizes that a dollar today is
worth more than a dollar in the future
due to the potential for earning interest
or returns.
Explain how the time value of money is
used in discounting future cash flows in
techniques like discounted cash flow
(DCF) analysis.
Illustrate the importance of considering
the time value of money in investment
decisions and financial planning.
Harshitha Manjuanth
How Are the 3 financial Statement
Related?
Describe how the income statement
shows a company's revenues and
expenses over a period, resulting in net
income.
Explain that the balance sheet provides a
snapshot of a company's financial position
at a specific point in time, showing assets,
liabilities, and equity.
Highlight that the cash flow statement
tracks the inflow and outflow of cash over
a period, reconciling with changes in cash
on the balance sheet.
Stress the interconnectedness of these
statements in providing a comprehensive
view of a company's financial performance
and health.
Harshitha Manjuanth
What are the different methods of
valuation?
Briefly describe common valuation
methods such as discounted cash flow
(DCF), comparable company analysis
(CCA), and precedent transactions.
Explain that each method has its
advantages and limitations and may
be more appropriate depending on the
industry, company size, and availability
of data.
Discuss the importance of using
multiple valuation methods to
triangulate a fair value estimate and
reduce valuation biases.
Harshitha Manjuanth
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10 Financial

www.harshithamanjunath37.com Harshitha Manjuanth

Be honest and concise about your

Define financial modeling as the

Define EBITDA (Earnings Before

Identify key factors such as interest

www.harshithamanjunath37.com Harshitha Manjuanth

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