The Art of the Financial Analyst Interview: Questions and Answers
Interviewing for a financial analyst role can be intimidating. You will likely face technical questions on accounting, financial modelling, valuation, investment analysis, and more. Success comes down to thorough preparation. Review the key skills and concepts a financial analyst must command. Research the company. And practice responses to common interview questions. With the right game plan, you can land your dream job.
Financial Analyst Interview Questions on Accounting and Finance
Financial analysts live in the world of numbers. Hiring managers will assess your quantitative aptitude and comfort level with key accounting and finance principles. Common questions include:
- Walk me through the three financial statements (Income Statement, Balance Sheet, and Cash Flow Statement).
- How does revenue recognition work? Discuss issues like accruals and deferrals.
- Explain concepts such as working capital, free cash flow, return on assets, and return on equity. How do they differ and what do they indicate about company performance?
I recently interviewed for a financial analyst role at a commercial bank. The hiring manager asked me to analyze a basic balance sheet he provided. I successfully identified red flags around the company’s working capital and inventory balances. This demonstrated hands-on accounting skills beyond textbook knowledge.
Questions on Valuation and Financial Modeling
Valuation drives so many key financial decisions and rests at the heart of the analyst’s work. Interviewers will gauge your valuation methodologies and financial modelling capabilities. Some questions may include:
- Which valuation methodologies do you find most helpful and why (multiples, DCF analysis, etc.)?
- Walk me through how you would build a 3-statement model in Excel.
- How would you calculate a company’s weighted average cost of capital (WACC)? Why is this important?
In my last equity research interview, the hiring manager asked me to build a simple DCF model. I projected out five years of income statements, balance sheets, and cash flow statements, applied realistic growth assumptions, and calculated a range of company value scenarios. My modelling approach impressed the interviewer by demonstrating strong Excel skills paired with prudent financial analysis.
As one senior investment analyst shared with me:
“We look for analysts who truly understand how valuation connects to financial health and business strategy. Someone could have beautiful modelling skills, but if their assumptions and commentary lack insight, that raises questions.”
Behavioural and Situational Questions
Interviewers commonly incorporate behavioural questions to assess financial analyst candidates beyond their technical abilities. They want to understand why you pursue this career path along with your values, priorities, and work ethic. Some examples include:
- Why are you interested in financial analysis versus other finance career paths like investment banking?
- Tell me about a challenging situation or project you faced in a finance internship or course. How did you handle difficulties to achieve desired outcomes?
- Imagine you are staffed on a collaborative analysis project with peers who have different work styles than you. How would you navigate team dynamics or conflict to deliver an exceptional final work product?
The key is addressing behavioural questions with specific examples that showcase both relevant hard and soft skills. Quantify your impact and contributions wherever possible.
Closing Questions and Next Steps
The interview conclusion presents another opportunity to strengthen your candidacy:
- What attracted you to this firm and role based on conversations today?
- If selected as a finalist, are there any additional people or company resources you recommend I connect with?
This demonstrates genuine interest while underscoring your cultural fit and commitment to going above and beyond.
Financial analyst interviews prove challenging but immensely rewarding for qualified candidates who prepare with diligence. Utilize the strategies here to tackle questions on technical knowledge, valuation, modelling, problem-solving, and work ethic. Thoroughly research the role, company, and industry trends to engage your interviewers. With practice and confidence, you can transition from applicant to highly valued finance professional driving strategy through insightful analysis. Onward to success in your career journey!