Question Category: Technical Competence
This is the third in a series of posts about how to best answer interview questions for financial analyst jobs, based on question categories: Education and Work Experience; Goals and Company Knowledge; and Technical Competence.
In the first two posts of this series, we discussed financial analyst interview questions you should expect to tackle in the categories of Education and Work Experience (part one) and Goals and Company Knowledge (part two). To wrap up the series, we will conclude with the category of Technical Competence.
As we mentioned in the earlier posts, interview preparation is key if you want to stand out as the best candidate for the job and advance your finance career. A seasoned interviewer will notice immediately if you are not prepared. Whether you are applying for an entry-level finance position or have a few years of work experience under you belt, do your homework.
Here are some of the questions regarding technical competence that you could face during your interview, along with some tips on how to approach them.
Technical Competence Questions
The interviewer will ask specific questions pertaining to finance terms, methodologies and your industry knowledge. Further, he or she will want to hear how your past experience (work experience, course work, industry involvement, etc.) has prepared you for the job duties at hand and which tools you have used. Some potential questions may include:
General Finance Questions
- What is EBITDA and how does it figure into revenues?
- What is a DCF analysis and can you walk me through how it works?
- What is EVA and in what scenarios would you use it?
- How do you define cash flow?
- What steps would you take to determine a company’s cash flow?
- When would you use a ratio analysis?
- How would you define present value analysis?
- What is a capital market and how does the concept apply to our clientele?
- What methods would you use to value a company?
- Can you explain in which scenarios you would use marginal costing, standard costing and activity-based costing?
- Which profitability models do you find the most accurate for forecasting?
- What impact can accounts receivable and inventory levels have on an income statement?
Questions Regarding Your Experience
- What quantitative coursework did you complete in college?
- Can you describe in detail a case study you completed in school, how you approached it and how the results would inform how you would approach this job?
- What software programs have you used for financial analysis?
- What types of charts and reports are you comfortable creating?
- Can you share a scenario (course work or real) where a company’s credit risk figured prominently into a financial analysis you performed?
- What stocks do you follow and why?
- Can you explain a financial analysis recommendation that you later regretted and what you learned from the experience?
- On a scale from one to 10, how would you rate your technical writing ability?
The interviewer is trying to: find out if you are well-versed in key financial terms and methodologies; learn how much experience you have making financial analysis decisions based on quantifiable tools and theories; get a grasp on how you approach a project; and determine how capable you are at formulating a recommendation based on the data and intelligence you uncover.
Prepare yourself for this series of questions by doing a thorough review of your past course work, case studies and job experience – essentially take a walk down memory lane. Refresh your knowledge of the different skills and methodologies you used, and think about how they would apply to the type of financial recommendations you would need to make if this specific company hired you.
The job description will help you focus in on the areas of expertise that the interviewer is hoping to find in a candidate, so review it closely and be prepared to address how you can excel at handling the specific duties and objectives listed.
There is no doubt that you will encounter a number of questions in your financial analyst interview that we didn’t cover in this series of posts. As we’ve said throughout, if you take the time in preparing for an interview and research the top companies on your list, you can increase your odds of standing out in this competitive job market.
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