Financial analysts research a company, sector, or industry, providing insights into future investments. This extensively data-driven field requires a bachelor's degree in commerce, finance, or statistics.
It is one of the most in-demand professions, making the job market highly competitive. If you are preparing for a financial analyst interview, you have come to the right place. In this blog, we will answer common financial analyst interview questions to help you prepare.
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Basic Financial Analyst Interview Questions
Interviewers expect strong foundational knowledge since financial analysts shape business strategies and key decisions. These include understanding the financial market, fundamental ratios and financial statements. Here are some entry-level interview questions:
How many financial statements can you name? Is there any connection between them?
There are three main types of financial statements: Cash Flow Statements, Balance Sheets, and Income Statements.
- Cash Flow Statement: It tracks cash movement across investment, operating and financial investments.
- Income Statement: This tracks profitability through revenues, costs and expenses over a period of time.
- Balance Sheet: This showcases a company’s assets, liabilities and equity shares.
What is cheaper, debt or equity?
When discussing debt or equity, debt is cheaper than equity as it has collateral backup. However, that does not mean debt financing is always better than equity. There are several pros and cons that a business needs to consider.
What are the key economic and market indicators you monitor as a financial analyst?
At the macro level, I monitor CPI and PPI, GDP growth, employment data, and interest rates. I also monitor industry-specific statistics that affect the company and currency exchange rates. These metrics combined provide a vivid idea of market opportunities and risks.
How is the income statement affected when inventory increases by Rs. 10,000?
Inventory purchases do not affect the income statement. Only the cash flow and balance sheets are affected.
What do you mean by financial modelling?
Financial modelling refers to creating a spreadsheet of a company’s financial performance. This helps in decision-making and future forecasts.
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Intermediate Interview Questions for Financial Analysts with Answers
When preparing for financial analyst interview questions, it is important to also brush up on your soft skills. Employers in 2025 will look for people adept at communication, teamwork, and accountability. When applying for higher levels, ensure that you portray confidence during the interview.
Here are the top intermediate-level questions that employers often ask:
Describe a situation when you manage substantial data volume. How did you manoeuvre through your setbacks?
There are two levels to this question. First, the interviewer wants you to elaborate on a real-life scenario. On the other hand, they want you to highlight the challenges you faced. Answer this question by highlighting the solutions you created for the challenges in managing data volume.
Imagine you are our company's CFO. Based on our current financial standing, what challenges would you face?
To answer this question, thoroughly analyse the company’s current financial positioning. Moreover, review its competitors in the industry. Based on the three financial statements—balance sheet, income statement, and cash flow statement—highlight where it can improve.
What do you do when you notice biases in financial forecasts?
The employer wants to know whether you understand human behaviour and systemic analysis in the financial field. Here is a sample answer for you:
I will start by reviewing historical data to understand and identify patterns. This process reveals any over- or under-analysis. In the next step, I employ multiple forecasting methods. To ensure validity, I will approach the data through both top-down and bottom-up methods. By understanding the why, we can produce better forecasts and prepare the company for them.
How would you calculate WACC?
To calculate WACC or Weighted Average Cost of Capital, I will multiply the cost of each source by its weight in market value. After that, I will add the results together to determine the total. The formula for the same is: WACC = (E/V * Re) + ((D/V * Rd) * (1 - T)).
A company has positive cash flow however it predicts trouble. How is that possible?
Yes, having positive cash flow and being in trouble simultaneously is possible. This can happen under two scenarios:
- When the company sells inventory but delays payables
- The company may have positive revenues, but predictions say it will be in trouble.
Advanced Financial Analyst Interview Questions
Practicing advanced-level questions helps you be prepared for technical topics. Senior positions demand knowledge of advanced topics. They are listed below:
What do you understand about valuation techniques?
The valuation technique determines a business's stocks. There are three approaches I take:
- Comparable Company Analysis: This approach evaluates a company's competitors to determine their current value. I will use metrics such as P/E (Price to Earnings) and EBITDA (Earnings, Before Interests, Taxes, Depreciation and Amortisation).
- DCF Analysis: Forecasting future cash flows to determine current value.
- Precedent Transactions: This method involves using the transactional values of recently sold companies to determine ours.
What are data formats in Excel?
The most common data formats in Excel are strings, numbers and currencies.
What tools do you use for advanced financial modelling/
Some of the business intelligence (BI) tools I have worked with are:
- Oracle BI
- Quantrix
- Maplesoft
- GIDE
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Conclusion
The role of a financial analyst is significant in any business. Combine your technical knowledge with practical experience to crack the interview. Remember that employers also look for soft skills along with technical proficiency. Practice these financial analyst interview questions to gain an edge during the interview process.
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