Interview questions for Finance
You’re just starting the finance recruiting season. Finance is a wide field covering insurance, retail banking, investment banking and other financial services. Interview questions will vary depending on the employer, the level of the job and your work experience. You’re an undergrad that needs to ace his or her finance job interview. If you want to ace your finance interview then make sure you review and perfect the answers to the below questions.
1. What motivates you?
This is your chance to detect what drives your finance candidates. Dig further to find out whether it’s about the money or the finance industry itself. Keep in mind, the desire to make money doesn’t necessarily equate to a sufficient drive to succeed or real passion for the business. It often comes with limitations.
2. How do you calculate the WACC?
WACC (stands for Weighted Average Cost of Capital) is calculated by taking the percentage of debt to total capital, multiplied by the debt interest rate, multiplied by one minus the effective tax rate, plus the percentage of equity to capital, multiplied by the required return on equity. Learn more in CFI’s free Guide to Understanding WACC.
3. What can you bring to this role that you’re certain other applicants don’t?
Get to the bottom of why this finance candidate truly deserves your attention. It could be their precise role-related experience, achievements within the industry, or even their unique personality. This question is also important for testing your candidate’s level of confidence — is it too much or just right.
4. What in your opinion makes a good financial model?
It’s important to have strong financial modeling principles. Wherever possible, model assumptions (inputs) should be in one place and distinctly colored (bank models typically use a blue font for model inputs). Good Excel models also make it easy for users to understand how inputs are translated into outputs. Good models also include error checks to ensure the model is working correctly (e.g., the balance sheet balances, the cash flow calculations are correct, etc.).
5. What hurdles or obstacles have you overcome?
Posing this question will help you key into your finance candidate’s ability to overcome adversity or challenges throughout their career. If you’re particularly interested in a piece of information on their resume, like a layoff, ask them directly about how they overcame that situation.
6. How do you go about persuading others to your point of view?
Finance professionals regularly have to persuade and influence people to accept their services, their expertise and their advice. Determining needs, selecting the most suitable approach and deciding on the right interpersonal style are all factors in successfully influencing others.
7. What would previous coworkers and managers say about you?
Zeroing in on how others perceive your interviewee is essential to find out whether they’re a match for the position and your company as a whole. Jot down what your candidate shares with you and follow-up with their references to see if the descriptions match.
8. Tell me about a recent high stress situation you were in. How did you manage it?
Finance jobs demand the ability to work well under pressure. The interviewer wants to know whether you are able to perform under stress and cope with difficult situations.
Show that you can stay calm and are able to plan to reduce stress.
9. Where do you see yourself in five years?
It’s important to understand whether your finance candidate’s career path is aligned with the position to which they are applying. Bringing on a candidate who’s just looking for a “here and now” type of position won’t do you any favors in terms of a long-term hire. Watch out for cookie cutter answers that end up sounding more like wishful thinking than actual long-term plans.
10. When does a LBO transaction occur?
Used when firm uses higher than normal amount of debt to finance purchase of a company, then uses company’s cash flows to pay off debt over time. The acquisiton’s assets may be used as collateral. Ideally, the acquisitions debt has been partially retired at time of exit.
11. Are you willing to relocate?
This should be a no-brainer for candidates who are truly passionate about the role. Any hesitation in answering this question should lead you to question them further.
12. What is EPS and how is it calculated?
EPS is the Earnings per Share of the company. This is calculated for the common stockholders of the company. As the name suggests, it is the per-share earnings of the company. It acts as an indicator of profitability.
Calculation: EPS = (Net Income – Preferred Dividends) / weighted average number of shares outstanding during the year.
13. Walk me through the Income Statement?
The first line of the Income Statement represents revenues or sales. From that we subtract the cost of goods sold, which gives gross margin. Subtracting operating expenses from gross margin gives us operating income (EBIT). We then (add/subtract) interest expense (income), taxes, and other expenses (income) to arrive at Net Income.
14. What are the major factors that drive mergers and acquisitions?
• To achieve synergies (cost savings)
• Diversify or sharpen the focus, market, or products of the company
• Gain new technologies
• Eliminate a competitor from the market or grow market share
• Increase Supply-Chain Pricing Power by buying a supplier or distributor
• Improve financial metrics and numbers
15. Tell me about a time when you successfully dealt with a difficult and demanding client?
Here the employer is exploring your resilience and ability to persist in the face of a challenge. Setbacks and difficult clients are part of the financial business and you need to demonstrate your ability to deal with this. Provide an example that clearly shows your determination and the interpersonal skills used to reach a positive outcome.