Investment Banking interview preparation
Every question below is either traced to a named firm from a public candidate report, or tagged at desk level when we could not trace it. Answers are written the way you would actually say them out loud — answer first, then the mechanism, then the limitation.
100 questions, mapped to the firms that asked them
- Questions
- 100
- Traced to a firm
- 100
- Firms
- 46
- Updated
- September 2026
002Tell me how $10 of depreciation flows through the three statements.Credit SuisseData Modeling · Chicago · 2023BarclaysInvestment Banking · New York · 2025MizuhoInvestment Banking · New York · 2026Houlihan LokeyDebt Capital Markets · Los Angeles · 2025
Say this
Assume a 25% tax rate. Pre-tax income falls by $10, taxes fall by $2.50, so net income falls by $7.50. Cash actually goes up by $2.50, because depreciation is non-cash and the only real effect is the tax saving.
Then walk it
- Income statement: $10 of depreciation hits EBIT, so pre-tax income is down $10 and net income is down $7.50 at a 25% rate.
- Cash flow statement: start from net income at minus $7.50, add back the $10 non-cash depreciation, so cash from operations is up $2.50.
- Balance sheet: cash is up $2.50, net PP&E is down $10, so assets are down $7.50 net. Retained earnings are down $7.50. It balances.
- The whole point is the depreciation tax shield. Ten dollars of a non-cash charge bought you two-fifty of real cash.
Where candidates lose it
Saying cash goes down. It does not. Depreciation is non-cash, so the only cash effect is the tax you no longer pay. State your tax rate before you start so the interviewer can follow your arithmetic, and say the words 'tax shield'.
Expect next
- Now do the same for $10 of CapEx instead.
- What if the company had no taxable income that year?
- How does this change if the depreciation is not tax-deductible in that jurisdiction?
Reported by candidates at Credit Suisse (Data Modeling, Chicago, 2023); Barclays (Investment Banking, New York, 2025); Mizuho (Investment Banking, New York, 2026); Houlihan Lokey (Debt Capital Markets, Los Angeles, 2025). Source: Wall Street Oasis.
011What is the difference between a finance lease and an operating lease, and which one affects valuation?MizuhoInvestment Banking · New York · 2026
Say this
Under current standards both sit on the balance sheet as a right-of-use asset and a lease liability. The difference is the income statement: a finance lease splits into depreciation and interest, while an operating lease stays as a single operating expense.
Then walk it
- Finance lease treats you as the economic owner. Depreciation sits in EBITDA, interest sits below it, so EBITDA is higher.
- Operating lease keeps the full rent inside operating expenses, so EBITDA is lower.
- That means two companies with identical economics can show very different EBITDA depending on classification. It directly distorts EV/EBITDA comps.
- For valuation, the practical answer is that you have to be consistent. Either capitalise leases for everyone and treat the lease liability as debt in the bridge, or treat rent as an operating cost for everyone.
- The mistake that actually costs money is adding the lease liability to net debt while also leaving rent in EBITDA. You have then charged the company twice.
Where candidates lose it
Answering with the pre-IFRS 16 world where operating leases were off balance sheet. That has not been true since 2019. Get the current treatment right, then make the comparability point.
Expect next
- So do you include the lease liability in net debt?
- How would you compare an airline that leases its fleet with one that owns it?
- Which industries does this distort most?
Reported by candidates at Mizuho (Investment Banking, New York, 2026). Source: Wall Street Oasis.
017Given a $10 change in revenue, COGS, or CapEx, which has the highest impact on a DCF?MizuhoInvestment Banking · New York · 2026
Say this
CapEx, because $10 of CapEx reduces cash flow by the full $10 with no tax offset. Revenue and COGS both flow through the income statement, so their effect is only $10 times one minus the tax rate.
Then walk it
- A $10 increase in CapEx is a straight $10 reduction in unlevered free cash flow that year. Dollar for dollar.
- A $10 increase in revenue lifts EBIT by $10 only if there is no incremental cost, and after a 25% tax it is worth $7.50 of cash flow.
- A $10 increase in COGS reduces EBIT by $10 and costs $7.50 of cash flow after tax.
- So per dollar, CapEx bites hardest in the year it happens.
- But over the full forecast the ranking can flip, because a revenue change usually persists and compounds into the terminal value, while a one-off CapEx spike does not. If the question means a permanent change, revenue wins.
Where candidates lose it
Answering the arithmetic without asking whether the change is one-off or permanent. The interviewer is probing whether you understand that terminal value capitalises recurring changes. Ask the clarifying question, then answer both cases.
Expect next
- Is that change one-time or permanent in your answer?
- What if the CapEx is growth CapEx that lifts future revenue?
- Which one would you sensitise in the deck?
Reported by candidates at Mizuho (Investment Banking, New York, 2026). Source: Wall Street Oasis.
037Is the deal accretive or dilutive to the acquirer's EPS, and by how much?MizuhoInvestment Banking · San Francisco · 2026Bank of AmericaConsumer and Retail · London · 2026
Say this
The quick test is to compare the cost of the funding with the yield you are buying. If the target's earnings yield, the inverse of its P/E, exceeds the after-tax cost of the capital you use, the deal is accretive.
Then walk it
- For an all-stock deal the rule is simple: if the acquirer's P/E is higher than the target's, it is accretive. You are issuing expensive paper to buy cheap earnings.
- For cash, compare the target's earnings yield to the after-tax interest forgone on the cash. Cash earning 3 percent pre-tax, so about 2.25 percent after tax, against a target at 20 times P/E which is a 5 percent yield, is accretive.
- For debt, compare the target's earnings yield to the after-tax cost of the new debt. Debt at 7 percent pre-tax is 5.25 percent after tax, so a 5 percent yield target would be slightly dilutive on that funding alone.
- To quantify it, build the pro forma: combined net income including synergies and financing costs, divided by the new share count, against standalone EPS.
- Then the point that matters: accretion is not the same as value creation. You can buy a low-multiple, declining business, show accretion, and destroy value. The real test is whether the price is below the intrinsic value plus achievable synergies.
Where candidates lose it
Treating accretion as proof the deal is good. It is an EPS arithmetic result, not a value judgement. Saying so unprompted is exactly what the Bank of America version of this question was reaching for.
Expect next
- What drives the result, and how would you assess whether the deal creates value?
- So can an accretive deal destroy value?
- Where would the breakeven price be?
Reported by candidates at Mizuho (Investment Banking, San Francisco, 2026); Bank of America (Consumer and Retail, London, 2026). Source: Wall Street Oasis.
060Describe the differences between private credit and bank syndicated debt.MizuhoInvestment Banking · New York · 2026MizuhoGeneralist · New York · 2026
Say this
A private credit loan is held by one or a handful of funds, negotiated bilaterally, priced higher but certain and fast. Syndicated debt is arranged by a bank and sold to many institutional investors, cheaper but subject to market conditions.
Then walk it
- Execution certainty is the big one. A direct lender commits and holds. A bank underwrites and then has to syndicate, so the borrower carries flex risk if the market moves against them.
- Price: private credit typically costs 100 to 300 basis points more. You pay for speed, confidentiality and certainty.
- Documentation and relationship: a small lender group means you can renegotiate in a downturn with people you know. A broadly syndicated loan means hundreds of holders, some of them distressed funds who bought in at a discount and want a different outcome.
- Size and liquidity: the syndicated market handles the largest deals and trades in a secondary market, which matters for pricing transparency. Private credit paper is illiquid and marked by the manager.
- Structurally, private credit has taken a large share of mid-market and increasingly large-cap leveraged lending, which is why the market can now fund deals when the syndicated window is shut. The systemic question people are watching is whether valuations in an illiquid, manager-marked asset class are honest through a real default cycle.
Where candidates lose it
Describing only the price difference. The reason private credit won share is certainty of execution and flexibility of documentation, not price. If you can also name the concern about mark-to-model valuations, you sound like someone who reads the market.
Expect next
- Why has private credit taken share from the banks?
- Which would you advise a sponsor to use?
- Tell me about the two different types of loans in the broadly syndicated loan market.
Reported by candidates at Mizuho (Investment Banking, New York, 2026); Mizuho (Generalist, 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.