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. 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?
2. 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.

3. 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.

4. 054NPV and IRR disagree on which project to pick. Which do you follow, and why does IRR mislead?Capital budgetingIntermediatetechnicalCorporate financeCorporate FP&A

   Say this

   Always NPV. It measures value created in rupees at your actual cost of capital. IRR is a rate, and a rate tells you nothing about size, assumes you can reinvest every interim cash flow at that same rate, and can have more than one solution or none.

   Then walk it

   1. The scale problem: a project returning 60 percent on 10 lakh creates 6 lakh of value. One returning 18 percent on 5 crore creates far more. IRR ranks the first higher and shareholders prefer the second.
   2. The reinvestment assumption: IRR implicitly assumes every interim cash flow is reinvested at the IRR itself. If the project shows 35 percent and your genuine reinvestment opportunity is 12, the 35 percent is fiction.
   3. The timing problem: IRR favours projects that return cash early, which systematically disadvantages long-dated infrastructure or R&D projects that create more total value.
   4. The mathematical problem: a project with alternating cash flow signs, such as a mine with a large end-of-life restoration cost, can have two IRRs or none. NPV always has exactly one answer.
   5. And it ignores the cost of capital except as a hurdle. Two projects at 20 percent IRR are not equivalent if one is a domestic capacity expansion and the other is a greenfield in a new country with a different risk profile.
   6. Where IRR is genuinely useful is communication. Business heads and boards think in rates, and comparing a rate against the cost of capital is intuitive. So I would present both, decide on NPV, and use MIRR if the reinvestment distortion is large.

   Where candidates lose it

   Saying IRR is wrong without naming the mechanism. You need the reinvestment assumption and the scale problem specifically. Also do not dismiss IRR entirely, because every real investment committee uses it and saying so shows commercial sense.

   Expect next

   • How does MIRR fix the reinvestment problem?
   • When would you get two IRRs?
   • How would you rank projects under a fixed capital budget?
5. 055Why do managers keep using payback period when we all know it is theoretically weak?Capital budgetingCoretechnicalCorporate financeCorporate FP&A

   Say this

   Because it answers a question NPV does not: how long is my money at risk. It is a liquidity and risk screen dressed up as a return measure, and for a capital-constrained business that is genuinely the binding question.

   Then walk it

   1. Payback is the time until cumulative cash flow turns positive. A 2 crore investment returning 50 lakh a year pays back in four years, and that is it, no discounting.
   2. The two textbook flaws: it ignores the time value of money, and it ignores everything after the payback date. A project that pays back in three years and then stops beats a project that pays back in four and runs for fifteen, which is obviously wrong.
   3. Discounted payback fixes the first flaw and not the second, and it is worth mentioning because it costs nothing to compute once you have the NPV model.
   4. But the reason it survives is real. For a mid-market Indian business funding capex from a cash-flow-constrained balance sheet, a five-year payback may be unaffordable regardless of NPV, because the company cannot carry the funding that long.
   5. It is also a crude proxy for forecast risk. Nobody believes year seven of a forecast, so a rule like 'must pay back in three years' is a way of saying 'only count the cash flows I trust'.
   6. So in a real investment paper I would present NPV as the decision metric, IRR for communication, and payback as a liquidity constraint with a stated threshold. Presenting payback alone is the error; ignoring it is a different error.

   Where candidates lose it

   Dismissing it as naive. The interviewer is testing commercial judgement, not textbook recall. Name the liquidity constraint and the forecast-credibility argument, then position it as a constraint alongside NPV rather than a rival to it.

   Expect next

   • What payback threshold would you set and why?
   • How does discounted payback change things?
   • Which metric would a lender care about most?
6. 056What is MIRR, and what problem is it solving?Capital budgetingHardtechnicalCorporate financeFinancial modelling

   Say this

   MIRR fixes the reinvestment assumption in IRR. Instead of assuming interim cash flows compound at the IRR, you compound them forward at your actual reinvestment rate, discount the outflows at the finance rate, and solve for the single rate that links the two.

   Then walk it

   1. Mechanically: take the future value of all positive cash flows at the reinvestment rate, take the present value of all negative cash flows at the finance rate, then find the rate that grows one into the other over the project life.
   2. Because of that, MIRR is always lower than IRR when IRR exceeds the reinvestment rate, and the gap widens with project length. A ten-year project showing a 32 percent IRR might carry a 19 percent MIRR at a 12 percent reinvestment rate. That gap is the fiction you were quoting.
   3. It also gives you a single unique answer, so it solves the multiple-IRR problem for projects with alternating cash flow signs.
   4. Where it matters most is private equity and infrastructure, where cash is returned in chunks across a long hold. An early dividend recap flatters IRR enormously and barely moves MIRR, which is exactly why sponsors quote IRR.
   5. Two honest weaknesses: you now have to assume a reinvestment rate, which is another estimate; and MIRR is still a rate, so it does not fix the scale problem. A big low-MIRR project can still create more value than a small high-MIRR one.
   6. So my ranking stays NPV first for the decision, MIRR when I want a defensible rate to communicate, and IRR only because everyone asks for it.

   Where candidates lose it

   Describing the formula without naming the reinvestment assumption it repairs. And do not claim MIRR is better than NPV. It is a better rate, not a better decision rule, and the scale problem remains.

   Expect next

   • What reinvestment rate would you assume?
   • Why do sponsors prefer quoting IRR?
   • Does MIRR solve the scale problem?
7. 057Which cash flows belong in a capital budgeting decision, and which do not?Capital budgetingIntermediatetechnicalCorporate financeCorporate FP&A

   Say this

   Only incremental after-tax cash flows. That means include opportunity costs, working capital, tax effects and terminal value, and exclude sunk costs, allocated overhead that does not change, and financing costs, because those sit in the discount rate.

   Then walk it

   1. The test for every line is: does this cash flow exist only because we do the project? The feasibility study you already paid for is sunk and irrelevant, however much it cost and however much the sponsor wants it counted.
   2. Include the opportunity cost of resources you already own. Using a vacant plot the company holds is not free; the relevant cost is what you would otherwise get for it. This is the most commonly missed item in real investment papers.
   3. Include working capital. A capacity expansion needs inventory and receivables from day one, and you get them back at the end. On a 100 crore project a 15 crore working capital build can move the NPV materially.
   4. Include tax properly: depreciation is not a cash flow but its tax shield is, so add it back and tax the operating profit. And do not forget the tax on any terminal-value asset sale.
   5. Exclude interest and principal. Financing is captured in the WACC, so putting debt service into the cash flows double-counts it. Candidates do this constantly and it makes every project look worse.
   6. Exclude allocated corporate overhead unless it genuinely increases. A share of the head office rent is an accounting allocation, not an incremental cost, and including it kills projects that should be approved.

   Where candidates lose it

   Including interest in the cash flows while also discounting at WACC. That is double counting and it is the single most common error in capital budgeting questions. The other classic is treating a sunk feasibility cost as relevant.

   Expect next

   • How do you handle the vacant land the company already owns?
   • Where does the working capital release go?
   • What if the project cannibalises an existing product?
8. 058I give you a list of possible projects with their values and their costs, and a fixed budget. How do you choose?Capital budgetingHardcase studyBridgewater AssociatesGeneralist · New York · 2025

   Say this

   Rank by value per rupee of the constrained resource, not by absolute value. Compute the profitability index, NPV divided by the capital required, take them in descending order until the budget runs out, then check the combinations near the cut-off because the greedy answer is not always optimal.

   Then walk it

   1. Profitability index is present value of inflows over the initial investment, or equivalently one plus NPV over investment. Anything above one adds value; ranking by it maximises value per unit of the scarce resource.
   2. A quick illustration. Budget 100. Project A: NPV 30, cost 60, index 0.50. Project B: NPV 18, cost 40, index 0.45. Project C: NPV 16, cost 40, index 0.40. Greedy picks A then B for 48 of NPV on 100 spent. Picking B and C gives 34. So A plus B wins, but you only know that because you checked.
   3. The reason you check is indivisibility. Projects cannot be taken in fractions, so this is a knapsack problem, and greedy ranking can leave budget stranded. With a handful of projects, enumerate the combinations; with many, solve it as an integer programme, which Excel Solver will do.
   4. Then the constraints that make it a real decision rather than an arithmetic one: mutual exclusivity where two projects do the same thing, dependencies where B requires A, and non-capital constraints like scarce engineering time, which may be the binding resource rather than money.
   5. Then the multi-period version. A project may be delayable, so the question becomes which projects this year and which next, and a one-year delay on a positive-NPV project has a real cost you should quantify rather than assume away.
   6. And I would flag the strategic overlay: some low-index projects are mandatory, safety, regulatory or IT security, so they come out of the budget before ranking begins. Pretending everything competes on index is how compliance projects get deferred until they become a crisis.

   Where candidates lose it

   Ranking by NPV alone, which strands capital, or by IRR, which ignores scale. The word the interviewer wants is profitability index, followed immediately by the acknowledgement that indivisibility makes greedy ranking imperfect.

   Expect next

   • What if two of the projects are mutually exclusive?
   • What if the binding constraint is engineers, not money?
   • How would you handle a project you can delay by a year?

   Reported by candidates at Bridgewater Associates (Generalist, New York, 2025). Source: Wall Street Oasis.

9. 059What is better: a one rupee increase in EBITDA or a one rupee decrease in debt?Capital budgetingIntermediatetechnicalAMAres ManagementPrivate Equity · New York · 2026

   Say this

   The EBITDA rupee, as long as it is recurring, because it is capitalised at the multiple. At eight times EBITDA, one rupee of extra EBITDA adds eight rupees of enterprise value and therefore eight of equity value. One rupee less debt adds exactly one rupee of equity value.

   Then walk it

   1. The arithmetic: equity value equals EBITDA times the multiple, less net debt. Differentiate on each term. A rupee of EBITDA is worth the multiple; a rupee of debt repayment is worth one, rupee for rupee.
   2. So at any multiple above one times, which is every real business, EBITDA wins on value. At eight times it wins eight to one.
   3. But the answer depends on the word recurring. A one-off rupee of EBITDA is worth one rupee, not eight, and the whole question is whether a buyer will capitalise it. That is why sponsors fight over which addbacks are run-rate.
   4. Then the cases where debt reduction wins. If you are close to a covenant breach, the rupee that keeps you compliant is worth far more than its face value, because a breach can cost you the company. Same if you are facing a refinancing wall in a shut credit market.
   5. There is also a second-order effect in favour of EBITDA: higher EBITDA lowers leverage on the same debt, which can reduce the interest margin on a ratchet and improve the rating. So EBITDA improves both terms and debt repayment improves only one.
   6. So my answer is EBITDA, by the multiple, with the caveat that it has to be recurring and that liquidity risk trumps value arithmetic when you are near a covenant.

   Where candidates lose it

   Answering 'they are the same, one rupee is one rupee'. The point is that EBITDA is capitalised and debt repayment is not. But an answer with no caveat is also weak: near a covenant breach, deleveraging genuinely wins.

   Expect next

   • At what multiple would you be indifferent?
   • What if the EBITDA improvement is a one-off?
   • How does a leverage ratchet change your answer?

   Reported by candidates at Ares Management (Private Equity, New York, 2026). Source: Wall Street Oasis.

10. 060Lease it or buy it. How do you decide?Capital budgetingIntermediatetechnicalCorporate financeTreasury

    Say this

    It is a financing decision, not an investment one, so first settle whether the asset is worth having at all. Then compare the after-tax cash flows of buying, including the depreciation shield and the residual value, against the after-tax lease payments, discounted at your after-tax cost of debt.

    Then walk it

    1. Separate the two questions. Whether to have the machine is an NPV question at WACC. How to fund it is a lease-versus-borrow question, and because both alternatives are contractual and low-risk, you discount at the after-tax cost of debt, not WACC.
    2. Buy case cash flows: the purchase outflow, the tax shield on depreciation each year, maintenance and insurance you now bear, and the residual value after tax at the end.
    3. Lease case cash flows: the rentals, fully tax-deductible as they are paid, usually with maintenance included in an operating lease, and no residual value because you never owned it.
    4. The net advantage to leasing is the difference in present values. In practice leasing wins where the lessor has a better tax position than you, where the asset obsoletes fast so you want the residual risk transferred, or where you cannot access the debt to buy it.
    5. For an Indian company two specifics matter: whether you can use the depreciation shield at all, because a loss-making or MAT-paying company cannot, and the GST treatment, since input credit on the asset purchase versus on the rentals affects the cash timing.
    6. And since Ind AS 116 the accounting difference has largely gone, both routes put an asset and a liability on the balance sheet. So decide on cash and tax, not on how it will look in the ratios, and say that explicitly if someone argues for leasing to keep debt off the balance sheet.

    Where candidates lose it

    Discounting at WACC. This is a debt-equivalent comparison, so the after-tax cost of debt is the right rate. The second trap is arguing for leasing to keep the liability off the balance sheet, which Ind AS 116 has ended.

    Expect next

    • What if the company is loss-making?
    • Why does the lessor's tax position matter?
    • Does Ind AS 116 change the economics or just the presentation?

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.