10 Essential Finance Interview Questions and Answers
Whether you’re an undergrad looking for your first job or you have six years in the field and are craving that next great opportunity, being prepared for your finance interview has never been more important. While excellent jobs in finance are common, they’re also highly competitive, making it even more necessary for you to impress your interviewer. We’ve put together the top 10 finance interview questions below to assist you in your journey to build a great career.
Table of Contents:
- Tell me a little about yourself.
- What motivates you?
- What can you bring to this role that you’re certain other applicants cannot?
- What hurdles or obstacles have you overcome?
- What would previous co-workers and managers say about you?
- If you could pick only one, which stock would you pick and why?
- How are the three main financial statements connected?
- What is EBITDA?
- Walk me through a DCF.
- If you were the Chief Financial Officer (CFO) of a Fortune 500 company, what would be your long-term concerns?
This common question is virtually guaranteed to be how the interviewer starts things off, so be prepared with how you’ll answer it. The interviewer is looking for your background and job experience but will want it to be relevant and concise. Don’t babble on about your recent vacation or your tennis partner. Instead, keep it directly related to the prospective role. A sample answer could be:
“I’ve been interested in finance since high school, and have worked in the finance industry for the past three years, interning with small banks as well as a large investment firm. As a result, I have a variety of experiences that offer strong cross-field impact and allow me to see unique perspectives: from managers to CEOs, and down to the customer. Post-graduation, I want to start working toward my MBA, which I know will only further enhance my skill set.”
Here, the interviewer is trying to detect what drove your decision to get into the finance industry. Even if money is a big perk, it shouldn’t be your only reason for interviewing for the position. Think about why you decided to pursue this field in the first place, and your answer is sure to come from the heart. For example:
“From a young age, I loved numbers and knew that I wanted to make a career of working with them. At the beginning of college, I found that I was able to help my roommates with their finances and could explain complex topics to them in an understandable way, further showing me that I was suited for this role. I love being able to take hard data and make it come alive for clients, and I enjoy helping them pursue and achieve their financial goals.”
With this question, the hiring manager is trying to cut through the excess and determine why you specifically deserve her attention. This is your chance to separate yourself from your competitors and really show off your achievements, experience, or even a unique perspective that makes you the best candidate. You might answer with something like:
“First, I have the years of experience you’re seeking for this position and have obtained that experience through a variety of roles. I proved myself at a bank and was quickly promoted to manage several employees. After making positive changes in that sector, I found the investment firm I’m at currently and have since made a huge impact on its clients. I’m good with numbers, and I’m also very outgoing. This gives me the ability to make a connection with my clients and help them make intelligent decisions. You’ll get the best of both worlds with me, and I’ll be able to build strong relationships with your customers.”
Employers use this question to get a better understanding of how you face challenges or adversity. If there’s anything on your resume that may be a red flag, this is a good chance to address it directly. For instance, if you were previously laid off from a job, this would be the perfect time to use the STAR method to explain that situation to them firsthand. If you haven't yet graduated or are a recent graduate, this also could be a chance to address a lack of experience:
“One of the biggest hurdles I had to overcome was securing my first internship. It was a very competitive position, and I was a rising junior, so most of the applicants were at least a year older than me. However, I had recently completed a major school project that was directly applicable to the bullet points in the job description, so I used this point to my advantage. I was awarded the internship and was further able to prove myself.”
With this question, the hiring manager is trying to assess whether you’re a match for the position as well as a fit with the company culture. It’s important to be honest about your answer (don’t say you’re extremely outgoing if you’re truly more of a wallflower) as there’s a good chance the interviewer will follow up with your references to see if the descriptions match. Also, this isn’t the time to brag about your biggest achievements, so keep it short and to the point. Here’s an example:
“I think my previous managers would say that I’m extremely detail-oriented. When working with numbers, even one small error can become disastrous. Whether it was a simple spreadsheet for a staff meeting or a detailed financial plan for a client, I always made sure to take my time and double-check it all before submitting. This eye for detail also carries over into my ability to meet deadlines and stay organized.”
For an industry-specific question like this, the hiring manager is trying to get a better sense of your personality and financial style. Are you a risk-taker or do you play it safe? Do you invest in the tried-and-true, or are you interested in the next big thing?
“While I’m always researching the latest and greatest players in the stock game, if I could pick only one, I would definitely choose Netflix. Netflix still has a large market to capture abroad, and I think the company is well-positioned to increase its growth over the long-term. Its position in the tech industry is huge, and Netflix has consistently beat estimates on revenue and earnings, making its stock a good choice.”
Since you’re interviewing for a job in finance, you should expect multiple questions regarding the basics. You might answer this question with something like:
“The three main financial statements are balance sheets, income statements, and cash flow statements. Net income links to both the balance sheet and the income statement, with net income flowing into the stockholder’s equity via retained earnings on this period’s balance sheet. After all of these are linked, the sum of the cash is added to the previous period’s ending balance.”
In the world of finance and investments, EBITDA is highly important, making it a topic that’s more than likely to be discussed in an interview. Speaking clearly to this concept demonstrates that you’re solidly grounded in key financial principles. In your finance interview, show off your knowledge with an answer like this:
“EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It gives the investor a good idea of how profitable the company is, and it’s a quick metric for the net income of an organization before certain deductions are made.”
In finance, a discounted cash flow (DCF) analysis uses the time value of money to value a project, company, or asset. A DCF is one of the most important methods of determining a company’s worth, so your interviewer will want to ensure you’re highly knowledgeable about it:
“The first step of a DCF model is to build a five-year forecast of the three financial statements, based on certain business assumptions and their performance. Next, I’d calculate the terminal value through the perpetual growth rate or exit multiple. Then, I’d discount the forecast period and the terminal value back to the present value with a discount rate. Finally, I’d arrive at the enterprise value for the business.”
10. If you were the Chief Financial Officer (CFO) of a Fortune 500 company, what would be your long-term concerns?
This question requires that you take a larger perspective of a company, including its goals, finances, and general well-being. It also shows your ability to think strategically. Make sure to connect your answer back to relevant issues, as well as different things on each of the three statements. One approach might be:
“If I were the CFO of a major company, I’d have different concerns regarding each of the three statements. With the income statement, I’d focus on revenue growth of the company as well as profits over the years. Concerning the balance sheet, I'd want to concentrate on capital assets, credit ratings, and liquidity ratios. Regarding the cash flow statement, I’d be concerned about cash flows in both the short term as well as the long term, and address how we might raise money through the years.”
Whether you’re just beginning your career or are looking for a different position, being prepared for your finance interview is crucial to your success. By studying our list of top finance interview questions, you can guarantee you’ll give your competition a run for their money.