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. 023Return on equity is up but return on capital employed is flat. What happened?Ratio analysisHardtechnicalRating agenciesCorporate FP&A

   Say this

   Leverage, almost certainly. ROCE is measured before financing, so if the operating return has not moved but the equity return has, the change came from the capital structure, not from the business.

   Then walk it

   1. ROCE is EBIT over debt plus equity. ROE is net income over equity. Borrowing to buy back shares or fund growth shrinks the equity base and raises ROE while ROCE sits still.
   2. A quick illustration: EBIT of 100 on capital employed of 500 is a 20 percent ROCE. Fund 200 of that with debt at 9 percent and equity of 300 earns about 61 after tax, so ROE is 20 percent. Push debt to 300 and ROE rises toward 23 while ROCE has not moved at all.
   3. The second possible cause is a smaller equity denominator for non-operating reasons: a buyback, a large dividend, an impairment or an actuarial hit to reserves. All of those flatter ROE without any operating improvement.
   4. The third is below-the-line income. A one-off gain, a fair value credit or a lower effective tax rate lifts net income but not EBIT.
   5. The conclusion I would give: the business is not getting better, the equity is just carrying more risk. That is fine if the cost of debt is well below ROCE and the earnings are stable, and dangerous if either of those fails.
   6. The check I would run is the same ratios through a downturn year, because leverage-driven ROE collapses fastest exactly when you need it.

   Where candidates lose it

   Guessing at operating explanations. The structural answer is that ROCE is pre-financing and ROE is post-financing, so a divergence is a capital structure or a below-the-line story. Name the buyback and the one-off gain as the two specific causes.

   Expect next

   • How much leverage is too much for that business?
   • Would you prefer ROCE or ROIC, and why?
   • How does a goodwill write-off affect these ratios?
2. 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.

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.