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. 010When should a cost be capitalised rather than expensed, and what does the choice do to the statements?Accounting policy and standardsIntermediatetechnicalBig FourCorporate FP&A

   Say this

   Capitalise when the spend creates a resource that will generate benefits over more than one period and you can measure it reliably. Capitalising flatters current profit and operating cash flow, and pushes the cost into depreciation and into investing cash flow.

   Then walk it

   1. The effect on the P&L: capitalising 100 of spend removes 100 of expense today and replaces it with, say, 20 a year of depreciation for five years. Current EBITDA goes up by the full 100.
   2. The effect on cash flow: the spend moves from operating to investing. Operating cash flow improves by 100 and free cash flow is unchanged. That is why EBITDA and operating cash flow can both be gamed while free cash flow cannot.
   3. The balance sheet gains an asset, so asset turnover falls and return on capital employed falls, which is the honest cost of the choice.
   4. The classic grey area is internally developed software and product development. Ind AS 38 lets you capitalise development once technical feasibility and intention to complete are established, but not research. The line is judgement, and companies sit on different sides of it.
   5. So when I compare two companies I check the policy note first. One capitalising development and one expensing it are not comparable on EBITDA at all, and the fix is to restate both to expensed.
   6. The red flag is capitalised cost growing much faster than revenue, or a sudden policy change with no operational reason.

   Where candidates lose it

   Saying capitalising 'improves cash flow' without specifying which cash flow. It improves operating cash flow and leaves free cash flow untouched. Getting that distinction right is the whole point of the question.

   Expect next

   • How would you adjust two peers with different capitalisation policies?
   • What does capitalisation do to return on capital employed?
   • Would you capitalise cloud migration costs?
2. 011What did Ind AS 116 change about leases, and why does it matter to you as an analyst?Accounting policy and standardsIntermediatetechnicalBig FourRating agencies

   Say this

   It put operating leases on the balance sheet. You now recognise a right-of-use asset and a lease liability, and the rent charge splits into depreciation and interest. EBITDA goes up, debt goes up, and nothing about the economics changed.

   Then walk it

   1. Before: a retailer's store rent was one operating expense line and the commitment sat in a note. After: the present value of the lease payments is a liability and the same amount, broadly, is an asset.
   2. P&L effect: rent disappears from operating expenses, replaced by depreciation on the right-of-use asset and interest on the lease liability. EBITDA rises by the full rent, EBIT is roughly unchanged, and early-year net profit is slightly lower because the interest charge is front-loaded.
   3. Balance sheet effect: reported debt jumps. For an Indian retail or airline company this can be the largest liability on the balance sheet. Net debt to EBITDA changes on both sides of the ratio.
   4. For anyone comparing history, the pre-adoption and post-adoption years are not comparable. Either restate or use a consistent lease-adjusted measure.
   5. Credit analysts were already capitalising leases before the standard, usually at eight times rent, so the standard mostly moved a note into the numbers. What genuinely changed is the covenant arithmetic, and a lot of covenants had to be renegotiated.
   6. The judgement left in it is the discount rate and the treatment of renewal options, and both are levers. A longer assumed lease term inflates both the asset and the liability.

   Where candidates lose it

   Saying EBITDA is unaffected. It rises by the entire rent charge, which is exactly why leverage multiples looked artificially better on adoption. Also mention that pre and post years are not comparable, because that is the practical consequence.

   Expect next

   • How does this change net debt to EBITDA for a retailer?
   • What judgement is left for management under 116?
   • How did credit analysts treat leases before the standard?

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.