Are you applying for a job as a financial analyst? Remember that job interviews can be stressful, but being ready for them can help you feel confident and on top of your game. That means you should be ready to answer both general interview questions and questions that are likely to be asked about the financial analyst job.
Financial analysts look at the past and present financial data of their own companies and other businesses. They may also help people and businesses make decisions about stocks, bonds, and other types of investments. As part of a typical job, you might have to look at financial data, write reports and give presentations, study business trends, look over a company’s financial statements, and maybe even meet with management to see how the company is doing and to rate their leadership team. They could work for a bank, an insurance company, a pension fund, or any other type of business in any field.
Interviewing for a financial analyst role? You can expect to face some tough questions. Financial analysis interviews will test your knowledge of finance principles, ability to think on your feet, communication skills, and more.
In this comprehensive guide, I’ll cover the 12 most common financial analyst interview questions, example answers, and tips on how to prepare
Why Financial Analysis Interviews Are So Challenging
Financial analyst interviews are designed to assess both your technical skills and soft skills Here’s an overview of what recruiters are looking for
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Technical expertise – Do you understand core financial statements, valuation methodologies, metrics, modeling, etc? Can you analyze data and communicate insights?
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Analytical thinking – Can you take vague problems and drill down to find creative solutions? Are you disciplined in your analysis?
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Communication – Can you distill complex analysis into clear takeaways and recommendations? How well can you present analysis to both technical and non-technical audiences?
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Leadership – Do you take initiative and ownership? Can you guide teams or mentor junior analysts? How do you respond to ambiguity or obstacles?
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Culture fit – Will your work style and personality mesh well with the team? Do your values align with the company’s?
With all of these areas to assess, interviews will incorporate both traditional and technical questions. I’ll provide example answers, but focus on conveying your thought process rather than reciting a scripted response.
Now let’s get into the top 12 financial analyst interview questions:
1. Walk Me Through Your Resume
Why they ask this: To give you a chance to expand on your background and connect the dots between your experience and the role.
This is often used as an icebreaker question. The interviewer wants you to highlight your relevant experiences and how they prepared you for this position.
Structure your answer chronologically, focusing on 1-2 bullet points per role. Explain what excited you about each opportunity and how it enabled your professional growth.
Leave out granular responsibilities, but discuss significant accomplishments, projects, or skills gained. Make sure to highlight any particularly relevant experiences in finance, analysis, modeling, etc.
Example response:
In college, I majored in finance and completed internships at both a Fortune 500 bank and a boutique investment firm. The bank gave me exposure to corporate finance analyses like credit underwriting, while the investment firm had me build discounted cash flow models to value public companies.
After graduating, I took a rotational program at XYZ Company allowing me to try FP&A, treasury, and strategic finance roles. FP&A was my favorite, since I enjoyed modeling for executive presentations and M&A due diligence.
Most recently, I worked for 2 years on a 5-person FP&A team at a media startup. We partnered closely with execs on budgeting, forecasting, metrics analysis, and ad hoc analyses. I also led development of a new driver-based model.
Overall, I’m looking to leverage this diverse analytical experience at a high-growth company like yours. The combination of corporate finance, startup finance, modeling, and communication make me an ideal fit for this analyst role.
2. Why Are You Interested in This Role?
Why they ask this: To gauge your passion for the role and ensure your career goals align with the position.
The interviewer wants to understand why you’re pursuing this opportunity and how it fits into your broader career aspirations. Be specific about what excites you – don’t just say the role seems “interesting.”
Tailor your response to the job description and company. Show that you researched them and know how you could contribute. Discuss shared values, growth opportunities, or anything else that drew you to apply.
Example response:
I’m excited to take on more responsibility and gain exposure to emerging industries. I love analyzing innovative, high-growth companies, which fits well with your firm’s focus on the technology sector.
Specifically, I’m interested in your focus on M&A advisory. Based on my background in valuation and corporate finance, I’m confident I could help build rigorous financial models to value potential targets. I’m also excited by the opportunity for client exposure and to keep expanding my strategic thinking abilities.
Overall, this role is the perfect next step to round out my skillset before hopefully progressing into a senior analyst or manager position in the future. I’ve heard great things about your meritocratic culture for ambitious team members, so I’m confident this is the right fit.
3. How Would You Evaluate a Company’s Performance?
Why they ask this: To assess your understanding of corporate performance metrics and analysis skills.
For this technical question, the interviewer wants to understand your process for analyzing a company. Show you grasp the key metrics, sources of data, and qualitative factors to consider. Structure your response methodically, as if giving a logical presentation.
Focus on high-level performance metrics first before discussing specific financial statements or valuation methods. List 1-2 key metrics upfront, then explain your thought process. Visual aids like the pyramid method can help.
Example response:
I would evaluate a company’s performance starting from the highest level and drilling down as needed.
First, I look at overall profitability metrics like gross margin, EBITDA margin, and ROIC compared to competitors. I gather these from income statements and company filings. Trends over time matter more than one-off years.
Next, I dive into the components of profitability: revenue growth, cost management, working capital efficiency. I use revenue drivers, expense ratios, DSO, etc. These come from the income statement, balance sheet, and cash flow statement.
Finally, I drill down to operating metrics and qualitative factors related to their strategy and industry. Market share, customer retention, production capacity – these provide context on performance.
Throughout the analysis, I benchmark to competitors and past performance. And I focus on metrics that align with management’s goals and the company’s strategy. This top-down, fact-based approach allows me to evaluate performance rigorously and identify root causes.
4. How Would You Explain Goodwill Impairment to a Non-Accountant?
Why they ask this: To assess communication skills and ability to simplify complex topics.
This tests whether you can explain technical finance concepts in simple, relatable terms – an important skill for client-facing roles. Avoid using jargon or overcomplicating your explanation.
Start with a simple definition before giving a relevant real-life example. Visuals and metaphors can help simplify concepts. Practice explaining accounting principles in a conversational way.
Example response:
Imagine you buy a pizza restaurant for $1 million. The building itself is worth $500K, but you paid extra goodwill because you think the restaurant can earn $100K profits each year.
But if profits only end up being $50K per year, you overpaid – that extra $500K isn’t justified anymore. That $500K goodwill needs to be impaired, or reduced on the balance sheet.
This impairment takes a one-time charge against earnings. It doesn’t directly affect cash flow, but signals you overpaid for that business based on actual performance.
5. How Would You Value a Company?
Why they ask this: To test your knowledge of corporate valuation methodologies.
There are many valid approaches to valuation, so don’t get fixated on one “right” methodology. Explain your thought process clearly and logically. Outline the common valuation methods, your preferred approach, and the pros/cons.
If asked for a specific estimate, walk through the steps at a high-level. Use a simple hypothetical example company and figures to illustrate your points.
Example response:
There are three main approaches I would consider:
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Discounted cash flow model: Projects future cash flows and discounts to present value. Requires forecasting revenues, margins, capex, etc.
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Trading comparables: Looks at valuation multiples (P/E, EV/EBITDA) of similar public companies. Fast and intuitive, but depends on finding close peers.
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Precedent transactions: Values based on past M&A deals in the industry. Directly relevant, but competitive dynamics shift over time.
I generally recommend a DCF model as the most thorough approach. We could project cash flows based on drivers like market growth, market share, pricing, and margins. I’d apply a discount rate based on the weighted average cost of capital.
The other methods provide helpful sanity checks. For example, we could look at the average industry EV/EBITDA multiple and consider an acquisition premium or discount. Each method has pros and cons, so using a blend helps triangulate the right valuation.
6. How Do You Stay Up-To-Date on the Markets and Economy?
Why they ask this: To learn more about your interests and how you gain financial knowledge.
Don’t just rattle off a boring list of publications here. Discuss 1-2 information sources that you find particularly insightful and why. Demonstrate genuine curiosity about financial markets.
Tell Me About a Time When You Had to Present Financial Data.
This question helps an interviewer assess whether you have experience and skills making presentations. Some financial analysts have to present data to company leaders or other people on a regular basis. Telling them how you’ve done in the past will help them guess how you’ll do in the job you’re applying for. Your answer will give people an idea of how you prepare for a presentation, what kind of data you’ve shown (including your own or someone else’s), and how comfortable you are talking in front of people with different levels of authority.
Perhaps they would also like to know if you thought the presentation went well, what you learned from it, and what you would change if you could do it all over again.
This is a great opportunity to use the STAR method to tackle your answer: Situation, Task, Action, Result. This involves setting the scene, describing what your responsibility was in that specific situation, explaining what steps you took, and talking about the outcome or results of those steps.
Before you start, give some thought to your answer, and be as specific as you can about a time in the past. “Don’t leave out any facts,” Jaffee says. “Include enough information that will allow the interviewer to get a good understanding of everything that was involved. ” And be prepared to answer follow-up questions about the story you’ve told.
An answer to this question might look like this:
“As a business, we were thinking about buying a competitor and needed to see what the combined finances of the two would look like.” I had to find synergies in terms of staffing, technology, payroll, and internal services that were already being provided by other departments. Then I had to make financial projections for the combined companies. First, I made sure I knew exactly what numbers my company’s leaders were focusing on and why. Then I got to work on the modeling part, sharing it with coworkers along the way for feedback and confirmation. The main part of that work was done, so I made a slide show with a model output and the most important conclusions I had reached. I presented my findings with specific recommendations to my team as well as a group of executives. As expected, they had a lot of follow-up questions. I was able to answer most of them right away, but I did have to go back to the model and change some things based on their comments. Most of my suggestions were followed in the end, but it was the ones that had to be changed that taught me the most. The next time I had to make a presentation like this, I tried to think of these kinds of questions ahead of time, and my suggestions were better (and were used with only minor changes). ”.
Give Me an Example of an Analysis Gone Wrong. What Could You Have Done Differently to Avoid the Problem, and What Did You Learn?
Did you make a model that missed three assumptions at first, and you didn’t realize this until you showed it to someone? Or did you make a model that just didn’t work the way it was supposed to, and six months later it wasn’t giving you the results you were hoping for?
Everyone gets things wrong sometimes and companies like to hear that you’re able to learn from your mistakes. Your time on the job isn’t as valuable if you haven’t learned and grown from your experiences. “Development is not just a function of time,” Jaffee says. “Development is a function of self-awareness.” (This is also why companies might ask about your greatest weakness.)
There are a few types of stories you should always have on hand in an interview, and one of them should be about a time you made a mistake or something didn’t go as you expected it to. Describe the mistake as directly and openly as you can—that’s part of what the interviewer will be looking for—and then move on and talk about how you’ve learned from it and what you’ve done since to ensure you don’t repeat the same mistake.
An example of an answer to this question might look like this:
“My team was told to make a model that would help us decide how many salespeople to hire by comparing the possible revenue to the cost of hiring and training them.” Six months later, we realized the model didn’t work as planned. We thought that adding three new salespeople would bring in $1 million in new sales, but all we got was $500,000. Here’s what I did to figure out what went wrong: I went over every part of the analysis and asked each stakeholder what they thought caused the difference between our projection and reality. Through that process, I learned that we had been wrong about ramp-up time and how many new customers salespeople could close in a sales cycle. Next time, we made sure to include those stakeholders earlier and go into even more specifics to check our assumptions from every angle and make sure we weren’t missing anything. ”.
Top 5 Financial Analyst Interview Questions & Answers (Easy to Hard)
FAQ
What is asked in a financial analyst interview?
What are the two most significant questions which must be asked by a financial analyst about the analysis of the financial statements of a company?
Why should we hire you for financial analysis?
