In this article, we have enlisted 30 financial analyst interview questions which also include answers. This is to help an individual who is aspiring to build a career as a financial analyst.
In our previous article on “how to become a financial analyst” we enlisted what is required to become one. Now if we assume that you have satisfied the requirements and you are interested in taking up the career. Many organizations or firms like financial institutions may be looking out to hire you.
On the contrary, you are looking forward to gaining a position in one of those firms. If you have submitted your resume then you should start thinking of the likely questions and the answers you will give.
Some organizations might require that you come for a written interview while others may prefer an oral interview. Whichever be the case the significant part is that you will be providing answers to specific questions.
You must prepare yourself by reviewing what questions the employer may likely ask. You should expert questions related to how knowledgeable and experienced you are in your industry and career. The employer may also access your technical, and soft skill and your level of understanding of financial concepts.
Preparing yourself entails guessing what questions will be asked and what answer to give. Therefore, to help you make good preparation. Below are:
The interview questions and answers
Some employers may start asking questions about your resume. For instance, they might start by saying; from your resume, I observed some details about you
1. So can I know more about you?
Already your name is on the resume you presented but your employer would want you to explain more.
To answer this question you could start by saying your name, qualifications, and school attended. A brief introduction about yourself has built a foundation of official interaction.
An interview of questions and answers is a face-to-face consultation or discussion which involves interrogating and examining the other person. According to Wikipedia.org, an interview is a structured conversation where one participant asks a question and the other provides the answer.
2. What motivates you to take this profession?
The employer wants to know if you are interested in your chosen career or if you just want to work for the money.
Answer; My abilities in solving problems, making related decisions, and giving guidelines motivate me. In addition, I like taking care of clients’ financial assets, assessing their financial condition, and providing information for improvement where necessary.
3. If you are hired by the organization what area can you assist?
The employer wants to know your area of specialization, that is where your potential lies.
Answer; I will periodically as required analyze and prepare the organization’s financial report, and help proffer decisions and recommendations where needed. I will also gather information regarding investments and how to expand the organization’s revenue.
4. Have you worked for any organization before, if yes what position and why did you quit?
Here you need to state your initial place of work experience and your position as well. Put in plain words the way it is indicated on your resume and add your motive for resignation.
Ordinarily, your motive might be for the opportunity to work in a bigger firm to enhance your career growth. It might also be to change location or environment.
5. Why do you choose to work for this organization?
The employer wants to know if you are particularly interested in working for the organization or just needed any job.
Answer; I want to work for this organization because I like working for a team of experts. This I believe will help me grow more professionally in my career.
6. Can you work without supervision?
The employer wants to know your level of confidence and competence.
Answer; Yes, I can work without supervision; because I trust my ability and confidence to always bring out the best in me. So far the tasks are within my job descriptions and clear to me.
7. What are your strength and weaknesses that could benefit or discourage your career?
The employer wants to understand how determined you are in pursuing your career
Answer; my strength is the confidence in me that I can display my skills competently. I am a very patient person and creative too.
While my weakness lies in being given a task I have limited experience outside my roles.
8. What method can you use to create accurate financial reports?
This question is very important; hence the employer wants to know how proficient you are in conducting financial analysis.
Answer; to create a financial report first I will gather every important financial statement and data. This statement involves the balance sheet, retained earnings, cash, and income flow statement. Next, I will assess the organization’s current and past financial performance, revenue stream, and cost structure.
Then finally presents a comprehensive report of the organization’s financial health, strengths as well as weaknesses. I will then also present necessary recommendations for improvement.
9. How can you handle discrepancies in the organization’s financial record?
The employer’s motive for asking this question is to determine how you will react to the dilemma.
Answer; if I find out during my assessment of records that there are some inconsistencies, I will alert my superior. Then with that, we can discuss it with the directors.
10. What ways can you appraise an organization’s profitability
Answer; I can appraise the organization’s profitability by analyzing important ratios. For instance, the organization’s net profit margin, return on equity, return on assets, and gross profit margin. Then any other additional income and expenses are included.
11. How do you present complex financial data to non-financial stakeholders?
Answer; I understand that non-financial stakeholders are those who patronize the organization. Therefore, I use data visualization tools and make communications very clear so that they understand what is explained.
12. What is financial modeling and what do you understand about it?
Answer; It is a statistical and mathematical method used when assessing financial statements. The practice is about making projections on what the organization’s performance will look like in the future. With this, I monitor the progress of the organization and what further funds should be invested concerning anticipated earnings.
13. What financial modeling techniques are you familiar with?
Answer; I have experience in three modeling techniques. They are sensitivity analysis, discounted cash flow, and scenario analysis.
14. Can you briefly explain one of these techniques?
Answer: let me explain the sensitivity analysis; it is simply a method used to forecast the outcome of assessment using different approaches.
15. When financial modeling discrepancies occur, how do you handle them?
Answer: when errors occur, I reassess my financial models carefully, tracing every step and calculation.
16. What do you prioritize when you think of working with the organization’s team?
Answer: First, I look at their efficiency and effectiveness in executing leadership skills. Then, the ability to carry out plans effectively, and I also look at their track documentation.
17. In what ways do you stay updated on financial market trends and industry news?
Answer: I do this by attending financial industry conferences, seminars, and workshops. I also read and follow up on news on the stock market.
18. During the recession, how do you assess the financial health of an organization?
Answer: During the economic downturn, I concentrate more on the organization’s liquidity, revenue generation, and debt settlement. This is to enable me to determine its financial strength.
19. How do you determine an organization’s target capital structure?
Answer: To determine an organization’s target capital structure, I look at factors such as the organization’s level of risk tolerance cost of debt, and equity.
20. How do you evaluate the risk of an organization’s investment opportunity?
Answer: I evaluate the risk of an organization’s investment opportunity by examining the organization’s financial level with competitors and economy-wide factors.
21. Can you state the difference between a budget and a financial forecast?
Answers: Stating the difference between these two: A budget is a plan to allocate resources to achieve goals. while a financial forecast is a projection into the future and how the organization’s performance will look at.
22. Can you briefly explain SWOT?
Answer: SWOT analysis (According to Wikipedia.org) simply means a method to evaluate strengths, weaknesses, opportunities, and threats.
23. How do you perform SWOT?
Answer: To conduct SWOT I examine the organization’s strengths and weaknesses which means what it is capable of achieving. I then look at the opportunity and threats; with these, I will be able to understand its level among competitors.
24. What is the concept of free cash flow?
Answer: The concept of free cash flow comprises all the revenue made by the organization and is ready to be allocated to investors or for debit repayment or increment.
25. How do you analyze an organization’s competitors?
Answer: I analyze an organization’s competitors by evaluating the organization’s financial activities, product offering, market share, and competitive advantages.
26. How do you evaluate an organization’s credit risk?
Answer: The measures I can take to evaluate an organization’s credit risk is simply taking a study of its financial statement, overall credit history. I also evaluate credit ratings including debt levels.
27. Can a change in interest rate affect an organization’s financial report?
Answer: Yes it can affect the borrowing cost, when they have to repay the loan as well as the profit when the interest is deducted.
28. When a new product is launched, how do you judge the financial impact?
Answer: To judge the financial impact of a new product lunch, I examine the expected revenue and the cost connected to the new product. With this, I can determine its possible contribution to the organization’s finances.
29. What do you understand by EBITDA?
Answer: The whole meaning of EBITDA is earnings before interest, taxes, and amortization. It is what every organization uses to gauge its general financial position which excludes the amount of capital investments.
30. If eventually, the organization’s debt increases, how would the income statement change?
Answer: If the organization’s debt increases for instance the loan and liabilities this will cause a reduction in the net earnings.
The bottom line
The 30 financial Analytics questions and answers listed above are some of the possible questions to expect. However, as a financial Analyst, you do not have to limit your findings to the above questions and answers.
You need to expand your research to a variety of questions but do not deviate outside your career. Equipping yourself with enough information guarantees you the possibility of passing an interview and gaining a position in the organization.