Finance Interview Questions and Answers

Finance Interview Questions and Answers

This section covers commonly asked and expert level Finance Interview questions and answers. The types of questions covered are general, conceptual, behavioral, situationaland experience based. You can also find interesting examples and sample answers with each question.

Who are these Finance Interview Questions useful for?

These interview questions will be very useful to all the candidates interviewing for the finance roles in Investment banking, Retail banking and other financial services.

Both entry level freshers and experienced candidates will be benefited by these questions and answers.

1. How does financial management help a business?

Financial management helps the business to utilize the funds effectively and efficiently. It helps the business in the following ways:

i.) It helps in proper investment of funds.
ii.) It helps in forecasting of funds required to run the business efficiently.
iii.) It helps in the estimation of the budget.
iv.) It helps to determine the capital structure of the company.

2. What are the skills required for a professional to make a career in finance?

To work in the finance sector you would require certain skills. The skills required to make a career in finance are as follows:

i.) Analytical skills - The candidate should have the ability to think logically and analyze the situation and get a suitable solution.

ii.) Technologically savvy - In order to be more productive you need to have good technology skills. You must have knowledge of specific software and tools specifically required to work efficiently in this industry.

iii.) Excellent interpersonal skills - He/she should have the ability to build relationships with customers and co-workers.

iv.) Formal qualification - A candidate is expected to have certain qualification specifically required for their role in the finance industry.

v.) Excellent problem-solving skills - A candidate must have the capability to solve and handle problems.

vi.) Relationship management - A finance candidate handles people’s money. You need to maintain professionalism and should also be sensitive towards people’s requirement. He/she must be able to understand the personality of different types of people.

vii.) Leadership skills - You must have exceptional leadership skills and must have the ability to motivate the people around.

viii.) Communication Skills - The candidate needs to communicate confidently and should have good communication and presentation skills.

ix.) Innovative - Most of the candidates have an impression that innovation is not required in the finance sector. If you think so, you may be wrong. If you want to stand out you need to be innovative.

3. Why do you want to work in the finance sector?

Financial sector offers a wide range of choice. Some of the reasons why I find this sector attractive are:

i.) Dynamism: The finance sector is huge which gives you a lot of opportunities to choose the stream you would like to join.

ii.) Self-development: This sector allows you to diversify the skills you already possess and helps you to learn new skills.

iii.) Continuous learning: It’s a fast-paced industry where you will never stop learning. In order to grow you need to be adaptive and be ready to learn.

iv.) Quick career growth: If you have good thinking ability, have an analytical approach and deliver consistent results you can grow faster in this industry.

v.) Help people to plan their future: With the help of your financial background you may help people plan their retirement, plan for their children’s education, and investments

vi.) Smart people: You would get an opportunity to work with people who look at problem differently and are more focused to get the best solution.

4. What do you know about our company and our industry?

With this question, the candidate should be able to let the interviewer know about his/her industry knowledge and what have they read about the company. The interviewer would want a candidate who is passionate and would like to know if they have done some homework prior to the interview.

To answer this question confidently you must do your research work well. Check their company website and make sure you read the following properly:

i.) Read their "About us", vision, mission and work culture section carefully.
ii.) Know about their core values.
iii.) Be familiar with market trends affecting their business.
iv.) Review company’s annual report.
v.) Try to understand their business model and how it differs from the competitors.

5. What is debt financing?

You may expect these types of conceptual and technical question in your finance interview. You may be asked about certain financial concepts and to explain a few terms. You may be asked a question relating to strategy and business philosophy. You are expected to have knowledge of all basic financial concepts.

In debt financing, the investors pay funds in the business and expect to be repaid along with interest at some future date.

6. What are the different financial statements?

The different financial statements are as follows:

i.) Balance Sheet - This statement shows the company’s assets and liabilities and the shareholders equity.

ii.) Income Statement - This statement shows the company’s revenue and expenses.

iii.) Cash flow statement - This statement shows the cash flows from financing, operating and investing activities.

7. If you want to know the company’s assets and liabilities which statement would you refer to?

With this question, the interviewer is trying to understand your conceptual knowledge and analytical skills. Your answer to this question tells the interviewer about your ability to understand the financial process and the statements.

To answer this question you can say: "I would refer to the balance sheet and the profit and loss account i.e. the income statement to understand the company’s assets and liabilities. The balance sheet and the income statement will give me an idea how much assets the company owns and what are its liabilities."

8. Which statement would you look at to understand the company's overall financial status?

With this question, the interviewer is trying to understand your point of view of looking at the different financial statements and how well do you understand them. They would like to know if you really understand the use of each statement. Whichever statements you choose make sure you have reasonable justification for your answer.

To answer this question you can say something like: "I would look at the cash flow statement as it shows if the company is generating enough cash flow and if the company has a healthy cash balance. The balance sheet shows a one-time profit or loss of the company and does not show the performance of the company. The income statement, however, has certain expenses which may not affect the company."