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. 001How are the three statements related and connected?Three statementsCorephone / first roundMoody'sGeneralist · New York · 2022

   Say this

   The P&L shows performance over a period, the balance sheet is a snapshot at a point in time, and the cash flow statement explains how you got from one balance sheet to the next. They join at exactly two places: net income and cash.

   Then walk it

   1. Net income is the bottom of the P&L and the top of the cash flow statement. From there you add back non-cash charges, adjust for working capital, then run investing and financing.
   2. The closing cash number from the cash flow statement is the cash line on the balance sheet. That is link one.
   3. Net income less dividends flows into retained earnings inside equity. That is link two.
   4. So the balance sheet balances because both halves of net income land in it, the cash it generated on the asset side and the earnings it kept on the equity side.
   5. The reason it matters in an FP&A seat is that you cannot forecast one statement alone. If I forecast revenue growth of 20 percent, receivables and inventory move, which changes cash, which changes interest, which changes net income. The three statements are one model.

   Where candidates lose it

   Reciting three definitions and stopping. The word in the question is 'connected'. Say the two linkage points out loud, ending cash onto the balance sheet and net income into retained earnings, or you have not answered it.

   Expect next

   • If you could only see one statement, which would you pick and why?
   • A company is profitable but running out of cash. Where do you look first?
   • Walk me through how 100 rupees of depreciation moves through all three.

   Reported by candidates at Moody's (Generalist, New York, 2022). Source: Wall Street Oasis.

2. 002What are some non-cash items on the cash flow statement?Three statementsCoretechnicalMoody'sProject Finance · New York · 2018

   Say this

   Depreciation and amortisation, share-based compensation, impairments and write-offs, provisions and their movements, deferred tax, unrealised foreign exchange gains and losses, and the equity-accounted share of profit from associates.

   Then walk it

   1. The rule is simple: anything that hit the P&L but did not move cash gets added back or subtracted in the operating section.
   2. D&A is the obvious one, and it is usually the largest. Impairments and write-offs of receivables or inventory are the same idea in one lumpy hit.
   3. Share-based compensation is a real cost to shareholders through dilution but never touches the bank account, so it is added back.
   4. Provisions are worth calling out separately because two things happen: the charge is non-cash when you create it, but the utilisation is real cash later. A clean cash flow statement shows both.
   5. Then the ones people forget. Deferred tax, because book tax and cash tax differ. Unrealised FX on translating a foreign loan. And share of associate profits, which you consolidate one line in the P&L but only receive as a dividend.
   6. The reason a credit analyst cares is that the bigger the gap between EBITDA and operating cash flow, the more the earnings are made of accounting rather than cash.

   Where candidates lose it

   Stopping at depreciation and amortisation. That answer is worth about four seconds. The list is what separates someone who has read a cash flow statement from someone who has built one, so get to provisions, deferred tax and unrealised FX.

   Expect next

   • Which of those would worry you most if it kept growing?
   • How would you test whether a company's earnings convert into cash?
   • Why is a provision charge non-cash but the utilisation cash?

   Reported by candidates at Moody's (Project Finance, New York, 2018). Source: Wall Street Oasis.

3. 003Why do we use accrual accounting at all, if cash is what matters?Three statementsCorephone / first roundCorporate FP&ABig Four

   Say this

   Because cash timing is arbitrary and accrual accounting matches effort to reward in the period it happened. Cash tells you whether you survive. Accrual tells you whether the business works.

   Then walk it

   1. Accrual recognises revenue when you deliver and cost when you consume, regardless of when money moves. That is what makes two periods comparable.
   2. A concrete case: an infra contractor collects a 30 percent advance in March and delivers over 18 months. On a cash basis March looks spectacular and the following year looks terrible. Neither is true.
   3. It also stops management from managing the number by moving a payment date. Paying a supplier on 2 April instead of 31 March changes cash and changes nothing about performance.
   4. The cost of accruals is judgement. Every accrual is an estimate: percentage of completion, useful life, expected credit loss, warranty provision. Judgement is where earnings get managed.
   5. So in practice I would read both. Accrual for the operating story, cash for the truth test. When the gap between them widens for more than two or three quarters, the accrual story is usually the one that is wrong.

   Where candidates lose it

   Answering 'because the standards require it'. That is a rule, not a reason. Name the matching principle and then name its cost, which is estimation judgement, because that is the answer an interviewer remembers.

   Expect next

   • Which accrual would you test first on a manufacturer?
   • Where does accrual accounting mislead you most?
   • What is the cash conversion ratio and what does a low one tell you?
4. 004A company is reporting record profits but its bank balance is falling. Talk me through what you would check.Three statementsIntermediatetechnicalCorporate FP&ARating agencies

   Say this

   I would go straight to the operating cash flow line and compare it with EBITDA. Nine times out of ten the answer is working capital, and the usual culprit is receivables growing faster than revenue.

   Then walk it

   1. First test: EBITDA versus cash from operations. If EBITDA is 200 crore and operating cash flow is 40, the gap is the whole question.
   2. Then decompose the working capital lines as days, not rupees. Receivable days up from 55 to 85 on 20 percent revenue growth means you are funding your customers' balance sheets.
   3. Then check whether the revenue is real. Aggressive percentage-of-completion, channel stuffing near quarter end, or revenue booked on a distributor who has not sold through all show up as receivables that age.
   4. Then look below operating cash flow. Heavy capex, an acquisition, or debt repayment can drain cash while the P&L is fine. That is not an earnings problem, it is a funding problem, and the fix is different.
   5. Finally check the interest and tax lines for cash versus accrual differences, and check whether inventory is building because demand slowed.
   6. The one-line conclusion I would give a CFO: profit is an opinion, cash is a fact, and the bridge between them is days of working capital.

   Where candidates lose it

   Listing every possible cause in no order. Interviewers want a sequence. EBITDA to operating cash flow first, then working capital in days, then revenue recognition, then below-the-line uses. Sequence is the skill being tested.

   Expect next

   • Which working capital line would you fix first and why?
   • How would you spot channel stuffing from published accounts?
   • What would you say to the sales head whose receivables caused it?
5. 005Walk me from EBITDA to free cash flow.Three statementsIntermediatetechnicalCorporate FP&ACorporate finance

   Say this

   EBITDA less cash taxes, less the change in working capital, less capex gives you unlevered free cash flow. Take interest out after that and you have free cash flow to equity.

   Then walk it

   1. Start with EBITDA as a proxy for cash operating profit, then remember it is only a proxy. It ignores tax, working capital and the cost of keeping the assets running.
   2. Tax: the clean way is to tax EBIT, not EBITDA, so you give yourself the depreciation shield. EBIT times one minus the tax rate, then add depreciation back.
   3. Working capital: a growing business consumes cash here. If revenue grows 100 crore and you hold 60 days of net working capital, that is roughly 16 crore of cash gone before you earn a rupee of it.
   4. Capex: split maintenance from growth if you can. Maintenance capex is a genuine cost of staying in business, growth capex is discretionary, and treating them as one number is how people misjudge cash generation.
   5. Unlevered free cash flow is what the business produces for everyone who funded it. Subtract net interest and mandatory debt repayment and you get what is left for equity.
   6. The limitation worth saying out loud: EBITDA is the most abused metric in finance precisely because it sits above all three of those deductions. For a capital-heavy business it flatters everything.

   Where candidates lose it

   Taxing EBITDA instead of EBIT. It overstates the tax bill and understates cash by ignoring the depreciation shield. Also, stating the formula with no number attached makes it sound memorised. Put one figure on the working capital step.

   Expect next

   • Why unlevered rather than levered free cash flow for a valuation?
   • How would you split maintenance from growth capex from published accounts?
   • For which type of business is EBITDA most misleading?
6. 007What is the quality of the revenue? How would you actually judge that for a company you cover?Three statementsIntermediatetechnicalMoody'sCorporate Finance · New York · 2018

   Say this

   Revenue quality is about repeatability, cash conversion and concentration. I would ask three things: does it come back next year without being re-sold, does it turn into cash, and how much of it comes from the top five customers.

   Then walk it

   1. Repeatability first. Contracted or subscription revenue with a renewal rate is worth far more than project revenue re-won every year. For an IT services firm I would look at the share of annuity business versus time-and-material.
   2. Cash conversion. Revenue that sits in receivables for 90 days, or in unbilled revenue for longer, is lower quality than revenue collected in 30. Unbilled revenue growing faster than revenue is a classic warning.
   3. Concentration. If the largest customer is 25 percent of sales, the revenue carries a step-change risk that the growth rate will not show you.
   4. Then pricing versus volume. Growth from price with stable volume tells you there is real pricing power. Growth from discounting into a channel is borrowed from next year.
   5. And the accounting itself. Percentage of completion, gross versus net presentation for a platform, incentives and rebates netted or not, and whether anything material was recognised in the last week of the quarter.
   6. For a rating I would summarise it as: how much of this revenue would still be there next year if nobody made a sales call. That is the number that supports the debt.

   Where candidates lose it

   Treating this as a revenue recognition question only. Quality is commercial before it is accounting. Repeatability, cash conversion and customer concentration are the three levers, and naming concentration is what makes you sound like a credit analyst.

   Expect next

   • How are margins and operating leverage at that company?
   • What would you ask the CFO to prove revenue quality?
   • Which sector has the lowest quality revenue, in your view?

   Reported by candidates at Moody's (Corporate Finance, New York, 2018). Source: Wall Street Oasis.

7. 008What does deferred revenue tell you about a business, and how do you treat it in a forecast?Three statementsIntermediatetechnicalCorporate FP&ATechnology sector finance

   Say this

   It is cash collected before delivery, so it sits as a liability, not revenue. Growing deferred revenue is one of the best leading indicators you get in published accounts, because it is revenue already banked but not yet recognised.

   Then walk it

   1. Mechanically: cash up, deferred revenue up, nothing on the P&L. As you deliver, the liability unwinds into revenue and the cash flow shows a working capital outflow even though the business is fine.
   2. For forecasting, deferred revenue plus the contracted order book gives you visibility. If a SaaS company has 400 crore of deferred revenue and guides to 900 of revenue, nearly half of next year is already sold.
   3. The direction matters more than the level. Deferred revenue falling while revenue rises means you are recognising a backlog you are not replacing. That is a deceleration you can see two quarters early.
   4. It also funds the business for free. A company with large customer advances is being financed by its customers, which is why negative working capital and deferred revenue usually travel together.
   5. The caveats: it is sensitive to billing frequency, so a shift from annual to monthly invoicing collapses deferred revenue with no change in the business. And multi-year contracts split into current and non-current, so read both.
   6. So I would use it as a cross-check on management guidance, never as the forecast itself.

   Where candidates lose it

   Calling it revenue. It is a liability, and saying otherwise ends the conversation. The other miss is ignoring billing-frequency changes, which is the single most common false signal in deferred revenue analysis.

   Expect next

   • Would you rather own a business with rising or falling deferred revenue?
   • How does deferred revenue behave in a cash flow forecast?
   • What is the difference between deferred revenue and unbilled revenue?
8. 009How can a provision be used to manage earnings, and how would you catch it?Three statementsHardtechnicalBig FourRating agencies

   Say this

   You over-provide in a good year and release it in a bad one. The charge is non-cash and the estimate is a judgement, so a provision is the easiest cookie jar on the balance sheet. I would catch it by tracking the provision balance against the business driver it is supposed to reflect.

   Then walk it

   1. The mechanism: a large restructuring or warranty provision depresses this year's profit, which nobody minds because the year is already strong, then the unused portion is written back next year as a credit to the P&L.
   2. The tell is the roll-forward. Opening balance, charge, utilisation, reversal, closing balance. If reversals are a recurring line rather than an occasional one, the provisioning is deliberate.
   3. Second test: ratio the provision to its driver. Warranty provision as a percentage of revenue, expected credit loss as a percentage of receivables, inventory provision as a percentage of inventory. A drift of 200 basis points with no explanation is a question, not an answer.
   4. Third test: does the provision move in the opposite direction to profit? A charge in strong years and a release in weak ones is the signature.
   5. And look at where the release lands. A reversal credited into other income is at least visible. A reversal netted inside cost of goods sold is not, and that is the aggressive version.
   6. The honest limitation: a genuine change in estimate looks identical from the outside. So this is a question to put to management, not a conclusion to publish.

   Where candidates lose it

   Describing provisions generally without giving a detection method. The interviewer is testing whether you know the roll-forward exists and that provision-to-driver ratios are the practical test. Also do not accuse; say it raises a question.

   Expect next

   • Which provision would you test first on an auto component maker?
   • How does Ind AS 37 constrain this?
   • What other earnings management levers would you look for?
9. 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?
10. 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.