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. 015What is the cash conversion cycle, and what does a long one tell you?Working capital and cashCorephone / first roundCorporate FP&ATreasury

   Say this

   Inventory days plus receivable days minus payable days. It is the number of days between paying for something and being paid for it, and every one of those days has to be funded by debt or equity.

   Then walk it

   1. Inventory days is inventory divided by cost of goods sold times 365. Receivable days uses revenue, payable days uses purchases or cost of goods sold. Use the same basis consistently, because mixing revenue and COGS bases is the most common error.
   2. A worked case: 60 days inventory, 70 days receivables, 40 days payables gives a 90-day cycle. On 1,000 crore of revenue at 20 percent margin, roughly 90 days of cost is about 200 crore of cash permanently tied up.
   3. A long cycle is not automatically bad. A pharma company holding raw material because of regulatory batch testing is different from one holding it because demand fell.
   4. The useful version is the trend and the peer comparison. Ninety days against a peer group at 55 is a competitive disadvantage in funding cost, which is worth real basis points of return on capital.
   5. Negative cycles exist and they are wonderful. A quick-service restaurant or an e-commerce marketplace collects at the till and pays suppliers in 45 days, so growth funds itself.
   6. The limitation: it is built on year-end balances, which for a seasonal business are the least representative day of the year. Use averages or quarterly data where you can.

   Where candidates lose it

   Getting the sign on payables wrong, or mixing bases by using revenue for inventory days. Also, quoting the cycle without converting it into rupees of funding. The number only means something when you say what it costs to carry.

   Expect next

   • Which is worse, receivable days up 10 or payable days down 10?
   • How would you shorten the cycle without damaging sales?
   • Which Indian sectors run negative working capital?
2. 016Receivable days went up 10 and payable days came down 10. Which worries you more?Working capital and cashIntermediatetechnicalCorporate FP&ATreasury

   Say this

   They cost the same cash, but receivable days worry me more because that signal comes from your customers, and it usually means either credit quality is deteriorating or you bought revenue with terms. Payable days falling is more often a self-inflicted or supplier-driven choice.

   Then walk it

   1. On the arithmetic they are close to identical. Ten days of cost of sales out of the business either way, so the cash impact does not decide it.
   2. Receivables rising tells you something about demand. Either customers cannot pay, or the sales team extended terms to close the quarter. Both mean the reported revenue is lower quality than it looks.
   3. The test is ageing. If the increase sits in the over-90-day bucket, that is a collection and credit problem heading for a write-off. If it is spread evenly, it is more likely a terms change.
   4. Payables falling has three benign explanations: you took an early-payment discount, you switched to a supplier with tighter terms, or you lost your own credit standing with suppliers. The third one is the dangerous version, and it is a real distress signal.
   5. So my order of investigation is ageing first, then the discount and supplier-terms question, then whether the supplier is demanding advances because of concern about you.
   6. Practically, in an Indian mid-cap I would also check whether receivables sit with government or PSU customers, where 120 days is normal and not a quality signal at all.

   Where candidates lose it

   Treating this as an arithmetic question. The cash effect is the same; the question is about what each movement signals. Say 'receivables, because that signal comes from outside the company', then give the ageing test.

   Expect next

   • How would you read the receivables ageing note?
   • What would make falling payable days a distress signal?
   • How do you handle PSU receivables in a forecast?
3. 017Revenue is 1,200 crore and receivable days go from 60 to 75. How much cash does that cost, and what do you do about it?Working capital and cashIntermediatetechnicalCorporate FP&ATreasury

   Say this

   Roughly 49 crore. Daily revenue is 1,200 divided by 365, about 3.3 crore, times 15 extra days. At a 9 percent borrowing cost that is about 4.4 crore a year of interest for nothing.

   Then walk it

   1. The arithmetic out loud: 1,200 over 365 is 3.29 crore a day. Fifteen days is 49 crore of additional receivables, funded on the working capital line.
   2. Convert it into something a business head cares about. At 9 percent that is 4.4 crore of interest, and on a 10 percent net margin that is equivalent to losing 44 crore of revenue.
   3. Then find out where it is. Split by customer, by geography and by ageing bucket before proposing anything. A single large customer moving to 120-day terms is a different problem from a general slide.
   4. The levers, in order of how quickly they work: stop shipping to accounts beyond terms, tie a part of sales incentive to collection rather than booking, invoice on despatch rather than in a monthly batch, and offer a small early-payment discount where the maths works.
   5. Then the honest trade-off, which is the part that earns the answer: tightening terms can cost volume. So I would model the revenue you are prepared to lose against the 4.4 crore you save, and take that to the sales head as a choice, not an instruction.
   6. And I would put days of receivables on the monthly pack as a standing KPI with an owner, because what gets reported gets managed.

   Where candidates lose it

   Giving the rupee number and stopping. The interviewer wants to see you convert cash into interest cost, then into a business conversation. Also do not propose tightening credit without acknowledging the revenue it can cost.

   Expect next

   • What if the increase is all one customer who is 30 percent of sales?
   • Would you factor the receivables?
   • How would you incentivise the sales team on collections?
4. 018Is negative working capital a good thing or a bad thing?Working capital and cashIntermediatetechnicalCorporate FP&ARating agencies

   Say this

   Usually good, and occasionally the first sign of distress. It means suppliers and customers are funding your operations, so growth generates cash instead of consuming it. It turns bad when it is caused by stretching payables you cannot pay.

   Then walk it

   1. The healthy version: a food retailer or a QSR collects cash at the counter and pays suppliers in 45 days. Grow the store count and cash comes in ahead of the cost. Same for a marketplace holding customer advances.
   2. Why it is valuable: every rupee of growth is self-funded, so return on capital employed is structurally high and the business needs almost no external working capital line.
   3. The distress version looks identical in the ratio. A company that has run out of cash also has payables ballooning, but because it cannot pay them. The difference is whether payables are stretched by contract or by default.
   4. So the test is the quality of the payables. Are terms contractual and consistent, is there an ageing problem, are suppliers demanding advances or letters of credit, and is there a spike in the last month of the year?
   5. The second risk is fragility. A negative working capital business unwinds violently if volumes fall. Sales drop, you stop buying, payables collapse and you have to fund the unwind in cash. That is how a good model kills a company in one bad quarter.
   6. So I would say: excellent while growing, dangerous while shrinking, and always check whether the payables are chosen or forced.

   Where candidates lose it

   Answering 'good' and stopping. The interesting half is the unwind risk when volumes fall and the fact that distress produces the same ratio. Saying both is what makes the answer sound like experience rather than a textbook.

   Expect next

   • How would you distinguish stretched payables from negotiated terms?
   • What happens to that business in a 20 percent volume decline?
   • Which Indian sectors run this model?
5. 019Inventory days jumped from 45 to 70 in one quarter. Diagnose it.Working capital and cashIntermediatecase studyCorporate FP&ABusiness finance

   Say this

   I would split it three ways before saying anything: is it raw material, work in progress or finished goods, is it volume or valuation, and is it demand or supply. Those three cuts almost always identify the cause in an afternoon.

   Then walk it

   1. First the composition. Raw material building is usually a procurement or supply decision. Work in progress building points to a production bottleneck. Finished goods building means you made what you could not sell, and that is the worst of the three.
   2. Then volume versus price. Inventory in rupees can rise because steel prices rose 30 percent with no change in tonnage. Always ask for quantities, because the rupee number alone will mislead you.
   3. Then the denominator. Inventory days uses cost of goods sold, so a sales collapse raises days with no change in stock at all. Check whether the numerator or the denominator moved.
   4. Then the benign explanations: a deliberate pre-buy ahead of a price increase, stocking for a festive season, a new product launch, or a shift to a longer-lead-time import source.
   5. Then the consequences if it is finished goods. Obsolescence and provisioning risk, discounting that damages next quarter's margin, and a cash cost. Twenty-five days on 800 crore of cost of sales is about 55 crore.
   6. My deliverable would be an inventory ageing and slow-moving report by SKU with an owner per category, because the fix is operational and finance's job is to make the cost visible.

   Where candidates lose it

   Jumping straight to 'demand fell'. Half the time it is a price effect or a denominator effect. Ask for quantities and check whether cost of goods sold moved before you diagnose demand.

   Expect next

   • It is all finished goods. What now?
   • How would you set an inventory provisioning policy?
   • What would you put in the monthly pack to stop this recurring?
6. 020How does GST affect a company's cash flow?Working capital and cashHardtechnicalIndian corporate FP&ATreasury

   Say this

   GST is P&L neutral for a registered business but it is not cash neutral. You pay output GST to the government by the 20th of the following month, and you recover input credit only when your supplier has actually filed. That mismatch parks real cash with the government.

   Then walk it

   1. The mechanics: you collect GST on sales, claim credit on purchases, and pay the difference monthly. Because it is a pass-through, it never touches revenue or cost in the P&L.
   2. The first cash drag is timing. You remit output GST on invoices raised, whether or not the customer has paid you. So on 60-day receivables you are funding the government's tax for roughly a month and a half.
   3. The second is input credit matching. Credit flows only when the supplier's return reflects the invoice. A non-compliant vendor means your credit sits blocked, which is why vendor compliance is now a treasury issue, not just a tax one.
   4. The third is accumulated credit. Exporters and companies with an inverted duty structure build unutilised credit balances and depend on refunds, which take time. For an exporter that balance can be a serious chunk of working capital.
   5. So in a cash forecast I model GST as its own line: output payable, input credit available, net remittance by the 20th, and a separate refund-receivable line with a realistic collection lag. Never net it into revenue.
   6. The practical FP&A action is a monthly reconciliation of GST recoverable in the ledger against the portal, because differences are how companies discover blocked credit six months late.

   Where candidates lose it

   Saying GST has no cash impact because it is a pass-through. Pass-through in the P&L, not in cash. The output-before-collection timing and blocked input credit are the two effects an interviewer is listening for.

   Expect next

   • How would you model GST in a 13-week cash flow?
   • What is an inverted duty structure and who suffers from it?
   • How does finance make vendors comply?
7. 021A supplier offers 2 percent off if you pay in 10 days instead of 30. Do you take it?Working capital and cashIntermediatetechnicalCorporate FP&ATreasury

   Say this

   Yes, if you have the cash. Two percent for 20 days is about 37 percent annualised, which is far above any borrowing cost you have. The only reasons to decline are liquidity or a covenant constraint.

   Then walk it

   1. The arithmetic: you are paying 98 to settle 100, so the return is 2 over 98, about 2.04 percent for 20 days. There are roughly 18.25 such periods in a year, so annualised it is about 37 percent simple and higher compounded.
   2. Compare that with your marginal cost of funds. Even at a 10 percent working capital line, borrowing to take the discount earns you about 27 points of spread. It is one of the cleanest arbitrages in corporate finance.
   3. So the decision is never about the rate, it is about liquidity. If drawing the cash breaks a covenant, strands you before a large payroll, or uses headroom you need for a tax payment, you decline on treasury grounds and say so.
   4. Check the fine print too. Some discounts are settled as credit notes months later, which destroys the return, and some suppliers quietly raise list price to fund the discount.
   5. Also think about who else wants that cash. If the alternative use is funding receivables at a customer paying 37 percent-equivalent terms, you compare returns rather than assume the discount wins.
   6. And the reverse question is worth flagging: if your own customers ask you for a 2 percent discount for early payment, you are the one paying 37 percent, and the answer is usually no.

   Where candidates lose it

   Answering 'yes, 2 percent is cheap'. The number that makes the case is the annualised 37 percent, and the only competent refusal is a liquidity one. Skip the annualisation and you have shown no analysis.

   Expect next

   • What if your working capital line is fully drawn?
   • Your customer asks you for the same deal. What do you say?
   • How would you rank this against paying down debt?

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.