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. 050Why does reported profit differ between absorption costing and marginal costing?Unit economics and costingHardtechnicalCost accountingBig Four

   Say this

   Because of fixed overhead sitting in inventory. Absorption costing puts fixed factory overhead into the cost of each unit, so any unit you make but do not sell carries some of this year's fixed cost into next year. Marginal costing charges all fixed overhead to the period.

   Then walk it

   1. The rule: if production exceeds sales, absorption profit is higher, because fixed overhead is deferred in closing inventory. If sales exceed production, absorption profit is lower, because you are releasing last period's deferred overhead.
   2. A number makes it clear. Fixed overhead of 10 lakh, production 10,000 units, so 100 rupees absorbed per unit. Sell 8,000 and 2 lakh of fixed cost sits in inventory rather than the P&L, so absorption profit is 2 lakh higher than marginal.
   3. Which means absorption costing lets you increase reported profit by producing for stock. That is a genuine perverse incentive and it is one reason plant managers on profit targets build inventory.
   4. Ind AS 2 and IAS 2 require absorption costing for statutory inventory valuation, so you have no choice externally. Marginal costing is a management technique for decisions.
   5. So the practical split: absorption for the statutory accounts, contribution and marginal costing for every decision about pricing, product mix, make or buy and special orders. Using absorbed full cost for a pricing decision leads you to reject profitable business.
   6. The other trap is over- or under-absorption. If actual volume differs from the volume used to set the overhead rate, you get a variance that has nothing to do with efficiency, and it needs to be explained separately or it pollutes the margin story.

   Where candidates lose it

   Saying the difference is 'just presentation'. It is a real profit difference driven by inventory movement, and the direction is determined by production versus sales. Getting the direction backwards is the standard failure here.

   Expect next

   • Which gives a truer picture of performance?
   • How does over-absorption arise and where does it go?
   • Which would you use to decide whether to drop a product line?
2. 051A customer wants 20,000 units at a price below your full cost. Do you take the order?Unit economics and costingHardtechnicalCost accountingBusiness finance

   Say this

   If the price is above variable cost and you have spare capacity, it adds profit, so on the arithmetic yes. But I would only recommend it if the order does not displace better business and does not reset the price for everyone else.

   Then walk it

   1. The arithmetic first. Full cost 100, of which 70 variable and 30 absorbed fixed. Offer price is 85. Every unit adds 15 of contribution, so 20,000 units adds 3 lakh of profit, because the fixed 30 is being paid anyway.
   2. So the accounting answer is clear, and the reason candidates get this wrong is they compare price with full cost. Fixed cost is irrelevant to an incremental decision unless the order causes it to change.
   3. Then the conditions. Is there genuinely spare capacity, or does this displace full-price volume? If it displaces, the relevant cost includes the contribution you give up, and the answer usually flips.
   4. Does it trigger a step cost? Overtime, a second shift, additional tooling, extra freight or a special packaging run all count as incremental cost even though they look fixed on the standard cost sheet.
   5. Then the commercial risks, which is where finance earns its seat. Price leakage to existing customers, grey-market resale back into your own market, most-favoured-customer clauses, and the precedent that this buyer now expects 85 forever. In an export or institutional channel those risks are managed by segmentation and contract terms.
   6. So my recommendation would be: accept as a contained one-off with a defined volume cap, different packaging or channel, and a written statement that it is not a list price change. And I would name the margin dilution it will show in the monthly pack so nobody is surprised.

   Where candidates lose it

   Rejecting it because the price is below full cost. That is the textbook error the question exists to catch. But saying yes with no conditions is the other half of the trap, because the real answer includes displacement and price-leakage risk.

   Expect next

   • What if you are already at full capacity?
   • How would you stop the price leaking to existing customers?
   • Where does the contribution show up in the monthly variance pack?
3. 052Here are a few figures about an airline. Work out what it should charge for a ticket, and ask me for anything else you need.Unit economics and costingHardcase studyBain CapitalGeneralist · Boston · 2024

   Say this

   I would build cost per available seat kilometre, convert it to cost per seat on the route, divide by the load factor to get cost per sold seat, then add a margin. Before that I need four things: seats per aircraft, sector length, load factor and the split of fixed versus variable cost.

   Then walk it

   1. The structure: total operating cost per flight divided by seats gives cost per seat. Divide by the expected load factor, say 80 percent, and cost per sold seat rises by 25 percent. That step is the one candidates skip and it is the largest single adjustment.
   2. A worked illustration. If a flight costs 15 lakh to operate with 180 seats, that is about 8,300 per seat. At 80 percent load, cost per sold passenger is about 10,400. Add a 10 percent margin and the average fare needs to be around 11,500.
   3. Then I would ask what I am solving for, because the answer differs. The average fare needed to break even on the route is one question; the price of the marginal seat two days before departure is another, and there the only relevant cost is a few hundred rupees of fuel, catering and commission.
   4. That marginal-cost logic is why airlines use dynamic pricing. The same seat is worth 3,000 in a seat-sale ten weeks out and 18,000 to a business traveller on the day, and the fixed cost of the flight is sunk either way.
   5. The inputs I would keep asking for: fuel as a share of cost, aircraft ownership or lease cost per hour, crew and airport charges, ancillary revenue per passenger, and the competitive fare on the route. Ancillary matters enormously for a low-cost carrier; baggage and seat fees can be 15 to 20 percent of revenue.
   6. And the conclusion I would state: cost tells you the floor, competition and willingness to pay tell you the price. In a market with a dominant low-cost competitor, the cost-plus number is often simply unachievable, and then the decision is whether to fly the route at all.

   Where candidates lose it

   Dividing cost by total seats and quoting that as the fare. You must divide by load factor. The second trap is not asking questions: the interviewer deliberately gave you partial data, and the questions you ask are half of what is being marked.

   Expect next

   • What is the marginal cost of the last seat sold?
   • How would ancillary revenue change your answer?
   • A competitor prices 20 percent below your floor. What do you do?

   Reported by candidates at Bain Capital (Generalist, Boston, 2024). Source: Wall Street Oasis.

4. 053How would you build a loyalty programme for a rideshare business, and how would you know if it worked?Unit economics and costingHardcase studyJane StreetProduct and Strategy · New York · 2026

   Say this

   Treat it as an investment with a measurable return, not a marketing scheme. The programme costs you contribution per redeemed reward and buys incremental trips from riders who would otherwise switch. If you cannot measure the incremental trips, do not launch it.

   Then walk it

   1. Start with the economics of one trip: fare, driver payout, payment and support cost, leaving a contribution of maybe 15 to 20 percent of fare. Every rupee of reward comes straight out of that, so the programme has to move behaviour, not just reward it.
   2. Segment before designing. The high-frequency commuter is already loyal and paying them is pure margin leakage. The target is the mid-frequency multi-app user, four to eight trips a month, who is genuinely switchable. That is where incremental trips live.
   3. Design levers: earn rate, tiers with a threshold just above the target segment's current frequency, rewards that cost you less than they are worth to the rider such as priority matching or a waived cancellation fee rather than cash discounts, and expiry to cap the liability.
   4. Then the two supply-side pieces people forget. Loyalty that promises faster pickup requires driver density, so the reward may need a driver-side incentive to be deliverable. And a growing points balance is an accounting liability under Ind AS 115, deferred revenue for unredeemed points.
   5. Measurement is the whole answer: run it as a geo or user-level randomised holdout. Compare trips per user, retention and contribution per user between treated and control. Without a control group you will credit the programme with trips it did not cause, which is how most loyalty programmes are declared successful.
   6. The kill criteria I would write down before launch: incremental contribution per rupee of reward cost above one within two quarters, and no more than a set share of rewards going to users whose frequency did not change. If it fails either, shut it.

   Where candidates lose it

   Designing features without unit economics or a control group. The interviewer wants contribution per trip, a target segment that is actually switchable, and a holdout test. Cash discounts to your existing best customers is the answer that fails.

   Expect next

   • How would you size the incremental trips before launching?
   • What is the accounting liability for unredeemed points?
   • Would you fund it from the driver side or the rider side?

   Reported by candidates at Jane Street (Product and Strategy, New York, 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.