Finance Interview Questions

Finance Interview Questions

Finance Interview Questions

Updated 31 May 2021

Written by Amy Dawson
Amy Dawson
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If you are looking to enter into the financial sector, you must know how broad the term 'finance' can be.

It can cover an array of niche areas from banking to credit cards, capital markets and investments through to assets and liabilities, and even the creation and management of entire financial systems.

With so much to consider, it is easy to see how it can be challenging to prepare for a finance interview.

After all, numerous different areas could be discussed.

Jobs within the finance sector can range from:

Each job will have vastly different roles and responsibilities, and employers will be looking for additional skills for each position.

Here are various articles to help you understand how to write your cover letter, how to improve your resume and what you should do to prepare for your next finance interview.

Now let’s cover the common interview questions that employers could ask you during your finance interview.

This list should be a good starting point to help you understand what employers are looking for.

You should use this list as a practical tool to help you practice your interview technique.

Skills That Employers Will Be Looking for Within Your Next Finance Interview

The variety of job opportunities within the world of finance means that each distinct job role will have its priorities and skill requirements.

However, there are clear commonalities between finance jobs; therefore, you should provide evidence of the following skills.

Academic Qualifications

If you are applying for a job that requires specific knowledge (such as accounting), then you need to show that you have the academic qualifications necessary for that job.

Make sure you use your resume to focus on any core specialisms you may possess and highlight any certifications or professional licenses that you could have achieved.

Do You Have Any Experience With Specific Finance Systems or IT Software?

Finance jobs often use a particular software solution to allow them to track reports. If you have previous experience with any relevant financial software, make sure you reference it within your cover letter or resume.

An employer will be relieved to find a candidate who already knows how to use their preferred systems and hit the ground running with minimal training requirements.

Are You Familiar With Financial Reporting Methods?

Likewise, financial teams will have legal obligations to publish reports in a particular way.

It would help if you showed your prospective employer that you understand these reporting methods.

Can You Analyze Complex Information?

Financing involves understanding and interpreting sheer volumes of data. It would be best to show that you have the analytical skills to assess and understand this complex information.

Can You Demonstrate Any Complex Problem-Solving Skills?

A final skill you should try to showcase is your ability to problem-solve.

You will likely be working in an environment where you are trying to make as much money as possible for your business or customer.

Therefore, you need to show that you can think creatively and be a strong problem solver.

You Could Be Asked About Your Commercial Awareness

This is where you can show that you understand your company, sector, and the broader context in which you work.

This could be about understanding political and societal impacts on the business, or it could be about understanding where your business sits within the marketplace.

Having a strong commercial awareness can make you a better employee.

You Want to Demonstrate Your Leadership Skills

Finance jobs have clear career progression pathways, so you need to give employers an idea of what makes you a good leader.

It helps recruiters to identify those with potential and those who can stand out from other candidates.

Employers Want to Learn More About Your Interpersonal Skills

Recruitment is as much about ensuring that the recruitee can fit into an existing team and corporate culture as it is about making sure that you possess the technical skills to manage your day-to-day job.

Your interpersonal skills are about how you work with others, your self-confidence, your motivations, and how you build positive relationships with co-workers.

Be Aware Of Your Communication Skills

Employers must find those who can seamlessly communicate with others, whether it is colleagues from another department, representatives from other companies, or if you are working in a public-facing finance role, such as within a banking environment.

What Are the Types of Questions Commonly Asked During Finance Interviews?

Every job interview will be different, so there are no guarantees of what you may be asked within a finance interview.

The scope of the job interview will depend upon the role itself. A top tip is always to be well acquainted with the job description before entering the interview room.

It would help if you were 100% clear on what the prospective employer is looking for.

A well-written job description will identify what the job role entails and the skills, attributes, and character traits they are looking for.

However, it should be noted that interview questions can often be broken down into two distinct sub-categories.

What Are Your Soft Skills?

This is where they want to know more about who you are as a person.

They want to learn about your working style, how you get on with colleagues and what motivates you.

They may ask you about your behaviors.

This is so they can get a sense of how you work and whether you would fit in with the cultural fit of the organization.

What Are Your Technical Skills?

This will identify that you have the necessary qualifications and experience to show that you can do the job at hand.

Employers will be questioning you about specific elements of the job role to check that you are the right person.

This is where you want to showcase your technical skills, and explain how you can bring those skills into the new workplace.

Top 15 Finance Interview Questions and How to Answer Them

To help you prepare for a finance interview, we have compiled a list of fifteen common questions that we think you could be asked.

This list of questions considers both the soft skills and the technical skills and should give you a comprehensive idea of what to expect from the interview room.

1. Why Do You Want to Work in Finance?

This is your opportunity to showcase your motivation and your passion.

Employers want to hire those they think are passionate about their sector, so you need to briefly explain what appealed to you about finance as a career.

Think about what you enjoy about your job and how it plays to any strengths.

Example answer:

I was drawn to a career in finance because I've always had an analytical mind, with a keen interest in numbers. I've always enjoyed puzzles and riddles because it allows me to solve problems.

I felt that a finance career suited me because, to me, financing is about solving problems and using analysis to find new ways to improve profits and make money.

2. What Connects the Three Financial Statements?

This is a common finance interview question. You may be shown three statements.

For example, a balance sheet, an income statement, and a cash flow statement.

It would help if you indicated that you understand each different statement to assess how financially healthy a company is.

You may want to show that you can identify any net income and retained earnings, that you can identify depreciation and capital expenditures and that you can confirm any debt or liabilities to confirm the current cash balance.

This question is less about you as a person. It is more about testing you to see how you interpret the information provided.

The employer may throw this is to check that you are qualified and understand the jargon/terminology often used within the financial sector.

3. If You Had to Assess a Company's Financial Health by Only One Statement, Which Would You Choose and Why

This answer will help to identify your view of financing.

Different candidates will all have their own opinions. It is about being able to talk convincingly about your solution and explain your rationale.

Example answer:

I would choose the cash flow statement to provide a clear assessment of the financial health. This is because it shows how much money the firm generates and how much money is being spent.

A balance sheet contains useful information, but that only provides the detail at that moment in time. It quickly becomes dated. Similarly, an income statement is helpful to assess how much money is coming in.

Still, it may highlight too many expenses that aren't having any tangible impact upon the company's fiscal health. This could lead to an inaccurate assessment of the financial health of the business.

The 15 Questions You Could Be Asked in a Finance Interview and How to Answer Them

4. How Would the Purchase of an Asset Impact the Three Financial Statements?

This is another technical accountancy-based question to check that you know what the impact could be.

It would be best if you showed the recruiter that you understand the implications and explain them briefly.

It is a test of your financial knowledge as well as your communication skills.

Much of finance is about presenting your work to those without any background in finance.

Therefore, you need to demonstrate that you can explain complex matters in an easy-to-understand way.

Example answer:

When you purchase an asset, it needs to be included as an asset on your balance sheet. You need to be aware that this asset will depreciate over time, and this should be referenced on your year-end income statement.

If you've paid for the asset, you will also need to explain it on your cash flow statement – primarily as an investment activity.

5. Tell Me About a Problematic Financial Analysis Problem You Have Recently Worked With?

If you are applying for a job role as a financial analyst, you can expect to be asked this question.

The recruiter wants to know how you identified the problems, what you did to solve the problem and the final result.

It is a question that helps them understand more about your work style.

It is about showcasing how you can identify and analyze information and overcome challenges.

6. What Are the Best Practices of a Sound Financial Model?

Financial models often provide a summary of any expenses and earnings.

Businesses often use the models to forecast predicted growth and are often used by management teams as part of their data-driven decision-making.

There are many different types of financial models available and you need to showcase that you know what good models are to emulate and what is considered best practice within the sector.

Within your answer, you may want to highlight key elements of best practice, including color coding, the ability to cross-check information and how you can use simple graphics to highlight critical information visually.

This is your chance to demonstrate your communication capabilities and explain how you can use complex data to help management teams make confident decisions.

7. What Are the Best Ways to Value a Company?

Valuing a company is a core part of any investment banker's work; therefore, this is a general finance interview question.

You need to explain your thought process and share what calculations you could use and why.

There may be times when different measures are more appropriate than others.

If so, you need to explain your reasons.

For example, could you use a Multiples Approach, a Transactions Approach or a Discounted Cash Flow method?

How do you plan to test the validity of each valuation, and what could you expect to find out?

8. What Is Enterprise Value?

For this question, you need to explain to the recruiter what Enterprise Value is (the value of an entire firm, including the debt and the equity) and explain how it is calculated.

You need to be able to explain the calculation and explain when and why this would be used.

9. What Is and Why Would You Use the DCF Method?

A DCF is a discounted cash flow. It is often used to check the value of a business and can be used to help a business plan for the future.

This question is designed to help employers know your technical knowledge of what it is and understand when it is a valuable tool to be used.

It would help if you also shared how it can be used to help with future growth planning.

10. What Is EPS, and How Is It Calculated?

This finance interview question will check you are aware of crucial acronyms, what they are used for and how they are calculated.

In this instance, the answer is Earnings Per Share. It is a standard calculation that is given to shareholders to help them identify their profit.

The calculation is as follows: (net income - preferred dividends) ÷ average outstanding common shares = EPS.

11. What Is EBITDA?

This is a topic that is hugely important within the finance world, so you need to demonstrate that you have full awareness of what it means and why it is essential.

It is an opportunity to show that you know the basics of financing and have a solid understanding of the different acronyms used within the sector.

Example answer:

EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortization. Investors often use it to help them understand how profitable a company is.

It can easily identify the net income of a company before specific deductions.

12. What Are Your Financial Strengths and Weaknesses?

This is a common finance interview question because it allows the recruiter to know more about you. They want to see how you perceive yourself.

It is about explaining what you are good at while showing enough self-awareness to note that there are always areas for improvement.

This question could be answered by describing how you plan to overcome your weaknesses.

As part of your pre-interview preparation, you could conduct a personal SWOT analysis so that you are not caught off-guard.

Example answer:

My strength is establishing budgets for different departments. I see it as a way of solving a puzzle. By understanding how much money is available, I can use my analytical nature to determine how that money should be broken down into different departments.

I like to work out where I think the money is best spent and how we can make sure that we're getting a tangible return on any investment.

My weakness is in prioritizing workloads: sometimes, it's too easy to focus on the tasks that I like to do rather than what needs doing. However, I have developed techniques to help me prioritize my workload, which means that I can ensure everything is completed ahead of schedule.

13. Tell Me Why a Company Might Merge or Acquire Another?

There can be many reasons why a business might choose to merge with another company. This is not about providing one precise answer.

It is about demonstrating your awareness of the wide range of possible reasons and their benefits.

This is an opportunity to discuss any experience you may have in previous mergers and acquisitions.

You can explain what made the merger work well, or potential pitfalls to be aware of, and how you can overcome these difficulties.

14. If You Could Invest in Any Company, Who Would It Be and Why?

A recruiter may throw a curveball at you.

This type of finance interview question is to understand more about your personality.

They want to know who you are and what you are interested in.

This is an opportunity for you to share your interests and passions and show that you can identify a profitable business and explain why you think they would make a good investment opportunity.

It is about demonstrating your commercial awareness.

Your answer should illustrate your rationale and thought process and be persuasive enough to make them believe in you.

15. Please Tell Us About a Time When You Worked Closely With Non-Finance Professionals

The world of finance is highly technical and can consist of complex data sets that need to be analyzed and interpreted.

A core skill for any finance professional is communicating with others who may not have the exact technical comprehension or understanding.

Often finance managers need to work with business leaders to explain what is or is not feasible.

Therefore, your recruiter will be looking to understand more about your communication skills.

They will want to know how you work as part of a team and how you can explain complex matters in easy-to-understand ways.

This is your opportunity to demonstrate how you can be a team player, whether it is communicating with customers, investors, or C-Suite executives.

Final Thoughts

Within your next finance interview, you can expect to be asked a variety of questions to test your technical knowledge and capabilities, as well as showcase who you are and how you work.

Recruiters need to be confident that they are getting the right person for the job.

They will use your cover letter and resume to assess your credentials and will spend the focus of the interview checking to see that you can manage the job at hand.

Try to use this compilation of finance interview questions to practice your interview technique.

Each distinct job role will have vastly different questions. An accountancy interview will be hugely different from an investment banker interview.

However, the more you prepare and the more you practce answering 'typical' finance interview questions, the easier you will find the interview.

We hope you find this list of finance interview questions helpful.

Do not forget to search through any previous articles that we have published to make it easier to prepare for your upcoming finance interview.

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