Financial Analysis interview preparation

Questions

100

Traced to a firm

42

Firms

28

Updated

September 2026

Asked at

All firmsMoody's7Bain Capital3SSState Street3AMAres Management2BLBlackRock2DED.E. Shaw2MSMorgan Stanley2Oaktree Capital Management2S&P Global2Bridgewater Associates1Citadel1FTFranklin Templeton1Golub Capital1HWHarris Williams1Houlihan Lokey1J.P. Morgan1Jane Street1MWMarshall Wace1Millennium Management1Morningstar1PIMCO1Sycamore Partners1TSTruist Securities1Two Sigma1Vanguard1WMWellington Management1Wells Fargo Securities1Wolverine Trading1

Topic

All topicsThree statements9Accounting policy and standards5Working capital and cash7Ratio analysis8Forecasting and budgeting9Variance and management reporting7Unit economics and costing8Capital budgeting7Cost of capital and valuation7Markets and rates5Modelling, Excel and data8Business partnering6Brainteasers and estimation4Fit and career10

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseBrainteaserMarket viewFit

1. 001How are the three statements related and connected?Three statementsCorephone / first roundMoody'sGeneralist · New York · 2022

   Say this

   The P&L shows performance over a period, the balance sheet is a snapshot at a point in time, and the cash flow statement explains how you got from one balance sheet to the next. They join at exactly two places: net income and cash.

   Then walk it

   1. Net income is the bottom of the P&L and the top of the cash flow statement. From there you add back non-cash charges, adjust for working capital, then run investing and financing.
   2. The closing cash number from the cash flow statement is the cash line on the balance sheet. That is link one.
   3. Net income less dividends flows into retained earnings inside equity. That is link two.
   4. So the balance sheet balances because both halves of net income land in it, the cash it generated on the asset side and the earnings it kept on the equity side.
   5. The reason it matters in an FP&A seat is that you cannot forecast one statement alone. If I forecast revenue growth of 20 percent, receivables and inventory move, which changes cash, which changes interest, which changes net income. The three statements are one model.

   Where candidates lose it

   Reciting three definitions and stopping. The word in the question is 'connected'. Say the two linkage points out loud, ending cash onto the balance sheet and net income into retained earnings, or you have not answered it.

   Expect next

   • If you could only see one statement, which would you pick and why?
   • A company is profitable but running out of cash. Where do you look first?
   • Walk me through how 100 rupees of depreciation moves through all three.

   Reported by candidates at Moody's (Generalist, New York, 2022). Source: Wall Street Oasis.

2. 002What are some non-cash items on the cash flow statement?Three statementsCoretechnicalMoody'sProject Finance · New York · 2018

   Say this

   Depreciation and amortisation, share-based compensation, impairments and write-offs, provisions and their movements, deferred tax, unrealised foreign exchange gains and losses, and the equity-accounted share of profit from associates.

   Then walk it

   1. The rule is simple: anything that hit the P&L but did not move cash gets added back or subtracted in the operating section.
   2. D&A is the obvious one, and it is usually the largest. Impairments and write-offs of receivables or inventory are the same idea in one lumpy hit.
   3. Share-based compensation is a real cost to shareholders through dilution but never touches the bank account, so it is added back.
   4. Provisions are worth calling out separately because two things happen: the charge is non-cash when you create it, but the utilisation is real cash later. A clean cash flow statement shows both.
   5. Then the ones people forget. Deferred tax, because book tax and cash tax differ. Unrealised FX on translating a foreign loan. And share of associate profits, which you consolidate one line in the P&L but only receive as a dividend.
   6. The reason a credit analyst cares is that the bigger the gap between EBITDA and operating cash flow, the more the earnings are made of accounting rather than cash.

   Where candidates lose it

   Stopping at depreciation and amortisation. That answer is worth about four seconds. The list is what separates someone who has read a cash flow statement from someone who has built one, so get to provisions, deferred tax and unrealised FX.

   Expect next

   • Which of those would worry you most if it kept growing?
   • How would you test whether a company's earnings convert into cash?
   • Why is a provision charge non-cash but the utilisation cash?

   Reported by candidates at Moody's (Project Finance, New York, 2018). Source: Wall Street Oasis.

3. 007What is the quality of the revenue? How would you actually judge that for a company you cover?Three statementsIntermediatetechnicalMoody'sCorporate Finance · New York · 2018

   Say this

   Revenue quality is about repeatability, cash conversion and concentration. I would ask three things: does it come back next year without being re-sold, does it turn into cash, and how much of it comes from the top five customers.

   Then walk it

   1. Repeatability first. Contracted or subscription revenue with a renewal rate is worth far more than project revenue re-won every year. For an IT services firm I would look at the share of annuity business versus time-and-material.
   2. Cash conversion. Revenue that sits in receivables for 90 days, or in unbilled revenue for longer, is lower quality than revenue collected in 30. Unbilled revenue growing faster than revenue is a classic warning.
   3. Concentration. If the largest customer is 25 percent of sales, the revenue carries a step-change risk that the growth rate will not show you.
   4. Then pricing versus volume. Growth from price with stable volume tells you there is real pricing power. Growth from discounting into a channel is borrowed from next year.
   5. And the accounting itself. Percentage of completion, gross versus net presentation for a platform, incentives and rebates netted or not, and whether anything material was recognised in the last week of the quarter.
   6. For a rating I would summarise it as: how much of this revenue would still be there next year if nobody made a sales call. That is the number that supports the debt.

   Where candidates lose it

   Treating this as a revenue recognition question only. Quality is commercial before it is accounting. Repeatability, cash conversion and customer concentration are the three levers, and naming concentration is what makes you sound like a credit analyst.

   Expect next

   • How are margins and operating leverage at that company?
   • What would you ask the CFO to prove revenue quality?
   • Which sector has the lowest quality revenue, in your view?

   Reported by candidates at Moody's (Corporate Finance, New York, 2018). Source: Wall Street Oasis.

4. 027How would you qualitatively assess an entity?Ratio analysisHardtechnicalMoody'sRatings · Dallas · 2026

   Say this

   Four blocks: the industry it competes in, its position within that industry, the quality of management and governance, and its financial policy. The numbers tell you where it has been; the qualitative work is how you decide whether that continues.

   Then walk it

   1. Industry risk first, because it caps the rating. Cyclicality, capital intensity, regulation, barriers to entry, how fast technology changes it. A best-in-class steel company is still in a cyclical commodity industry.
   2. Then competitive position. Market share and whether it is stable, cost position on the industry cost curve, customer and supplier concentration, product and geographic diversification, and pricing power. The single best test of pricing power is whether margins held the last time input costs spiked.
   3. Then management and governance, and this is where an Indian assessment does most of its work. Track record against previously stated plans, promoter shareholding and pledging, related-party dealings, board independence, auditor history, and disclosure quality.
   4. Then financial policy, which is a statement of intent rather than a number. Stated leverage targets and whether they have been honoured, dividend and buyback behaviour, appetite for debt-funded acquisitions, and liquidity management.
   5. I would tie it together with one sentence: the qualitative view sets how much I trust the forecast, and therefore how much of a cushion I require in the ratios.
   6. The limitation to state: qualitative assessment is where bias enters. So I would anchor every judgement to an observable, a market share series, a pledge disclosure, a covenant history, rather than an impression of management from one meeting.

   Where candidates lose it

   Giving a vague 'management quality and industry outlook' answer. Rating agencies use a structured framework, so structure it into four named blocks and anchor each one to something observable. For an Indian entity, promoter pledging and related parties must appear.

   Expect next

   • How do you assess management quality without knowing them?
   • Which qualitative factor caps a rating most often?
   • What would you look at to test pricing power?

   Reported by candidates at Moody's (Ratings, Dallas, 2026). Source: Wall Street Oasis.

5. 049How are margins and operating leverage at the company, and what does high operating leverage mean for you as an analyst?Unit economics and costingIntermediatetechnicalMoody'sCorporate Finance · New York · 2018

   Say this

   Operating leverage is the share of the cost base that is fixed, and it decides how violently profit moves when revenue moves. High operating leverage means a small revenue change becomes a large EBIT change, in both directions.

   Then walk it

   1. The measure is the degree of operating leverage: percentage change in EBIT over percentage change in revenue. It equals contribution divided by EBIT, so a business with 40 crore of contribution and 10 crore of EBIT has a DOL of four.
   2. So at a DOL of four, revenue up 10 percent gives EBIT up 40 percent. Revenue down 10 percent gives EBIT down 40 percent. That symmetry is the whole point, and analysts routinely model the upside and forget the downside.
   3. High leverage sits with cement, steel, hotels, telecom, airlines, exhibition and any asset-heavy business. Low leverage sits with distribution, trading and staffing, where cost follows revenue almost one for one.
   4. For a credit view, operating leverage and financial leverage compound. A cement company at four times operating leverage and three times net debt to EBITDA converts a mild demand slowdown into a covenant breach. I would never assess one without the other.
   5. What I actually do with it: build the cost base into fixed and variable, compute the revenue decline that takes EBIT to zero, and compare it against the worst historical peak-to-trough volume decline in that industry. That is a far better risk statement than a margin forecast.
   6. The caveat is that fixed costs are only fixed for a while. Management cuts discretionary spend in a downturn, so realised downside leverage is usually a bit better than the arithmetic, and realised upside leverage a bit worse because of wage and maintenance catch-up.

   Where candidates lose it

   Defining operating leverage as 'high fixed costs' and stopping. Give the contribution-over-EBIT measure and a number, then insist on the downside case. Interviewers at rating agencies are specifically testing whether you compound operating with financial leverage.

   Expect next

   • What revenue decline takes this company's EBIT to zero?
   • How does operating leverage interact with financial leverage?
   • Which sector in India has the highest operating leverage?

   Reported by candidates at Moody's (Corporate Finance, New York, 2018). Source: Wall Street Oasis.

6. 072What is an appropriate IRR range and valuation multiple for the software industry?Markets and ratesHardtechnicalMoody'sAnalytics · New York · 2018

   Say this

   Sponsors in software typically underwrite to a 20 to 25 percent IRR, and the sector trades on revenue multiples rather than EBITDA because so much profit is reinvested in growth. But I would refuse to give a single multiple without knowing growth, retention and margin, because the dispersion inside software is enormous.

   Then walk it

   1. On IRR: private equity underwrites mid-20s and reports something lower. For software specifically the return is driven by revenue growth and multiple expansion rather than deleveraging, because these are asset-light businesses that carry debt against recurring revenue rather than against assets.
   2. On multiples: enterprise value to forward revenue is the working metric while a company is reinvesting through the P&L, and enterprise value to EBITDA once it matures. Quoting an EBITDA multiple for a company at 3 percent margin is meaningless.
   3. The three variables that set the multiple: revenue growth, net revenue retention and gross margin. Growth above 30 percent with retention above 115 percent commands a multiple several times that of a 10 percent grower with 95 percent retention, and the market re-rates that spread aggressively with the rate cycle.
   4. So the honest answer is a range with a condition attached. Mature, slow-growth, profitable software has traded in the mid to high single digits of revenue; high-growth has traded anywhere from 6 to 20 times forward revenue depending on the rate environment. Any point number I quote is wrong within a quarter.
   5. The rule of 40, growth plus margin above 40, is the shorthand the market uses to compare across the growth-versus-profit trade-off. It is a screen, not a valuation, and its weakness is that it treats a point of growth and a point of margin as equal when growth compounds.
   6. For an Indian angle: listed Indian IT services is a different business and trades on price to earnings in the low-to-mid twenties, because it is people-leveraged services revenue, not product. Conflating SaaS and IT services multiples is the mistake to avoid.

   Where candidates lose it

   Quoting a confident single multiple. The sector's dispersion is the answer, and so is naming the drivers, growth, retention and margin, that set the multiple. Also be ready to say why revenue multiples are used at all, which is reinvestment through the P&L.

   Expect next

   • Why revenue multiples rather than EBITDA?
   • What is net revenue retention and what level is good?
   • How does the rate environment move software multiples?

   Reported by candidates at Moody's (Analytics, New York, 2018). Source: Wall Street Oasis.

7. 081You are the lead analyst in a meeting with the CFO. What questions would you ask?Business partneringHardsuperdayMoody'sCorporate Finance · New York · 2018

   Say this

   I would ask about the things I cannot get from the accounts: the quality and durability of the revenue, the margin and operating leverage outlook, the financial policy, and the liquidity plan. Questions a CFO cannot answer with a number from the annual report are the ones worth asking.

   Then walk it

   1. Revenue quality: how much of next year's revenue is already contracted, what the renewal or repeat rate is, what the top five customers represent, and where pricing has actually held when input costs moved.
   2. Margin and operating leverage: what proportion of the cost base is fixed, what volume decline takes EBIT to zero, and what the plan is if volumes fall 15 percent. That last question tells you more about management than any strategy slide.
   3. Financial policy, and I would press on it because it is a commitment, not a forecast: what is the leverage ceiling you will not cross, what would you do with a large acquisition opportunity that broke it, and what is the dividend and buyback intention.
   4. Liquidity and maturities: what is the refinancing schedule, how much undrawn committed facility is there, what covenants apply and what headroom exists at the last test date. Headroom, not the ratio, is what tells you about risk.
   5. Then the accounting questions I would want explained rather than assumed: the gap between EBITDA and operating cash flow over three years, the recurring 'exceptional' items, related-party balances, and any change in estimate or policy.
   6. And one open question at the end, because it usually produces the most useful answer: what keeps you awake at night about this business that the market has not focused on? Then listen rather than fill the silence.

   Where candidates lose it

   Asking questions answered in the annual report. The whole test is whether you know what is not in the filings: financial policy intent, covenant headroom, the downside plan. Also, ask about the EBITDA to cash gap specifically, because that is the credit analyst's question.

   Expect next

   • Which of those would you ask first if you had five minutes?
   • The CFO deflects on the covenant headroom. What do you conclude?
   • How would you verify the answers afterwards?

   Reported by candidates at Moody's (Corporate Finance, New York, 2018). Source: Wall Street Oasis.

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.