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
005How can a company have negative EBITDA but positive free cash flow?Wells Fargo SecuritiesInvestment Banking · Stanford · 2026
Say this
Working capital. If a company is collecting cash from customers faster than it pays suppliers, or taking cash upfront on subscriptions, that release of working capital can more than cover an operating loss.
Then walk it
- The most common case is a business with big deferred revenue or customer prepayments. Cash arrives before the revenue is recognised, so EBITDA looks bad while the bank account fills up.
- A shrinking business can do it too. If you stop buying inventory and collect your receivables, you liquidate working capital into cash for a year or two.
- Low or zero CapEx helps, since free cash flow is after capital spending.
- Big non-cash charges below EBITDA do not explain it, because they are already excluded from EBITDA. It has to be balance sheet movement.
- The important caveat: none of this is sustainable. Working capital release is a one-time source, not an engine.
Where candidates lose it
Answering with 'add back depreciation'. Depreciation is already excluded from EBITDA, so that explains nothing. The answer has to live below EBITDA, which means working capital or CapEx.
Expect next
- Is that free cash flow sustainable?
- Would you lend to this company?
- What would you check on the balance sheet to test your theory?
Reported by candidates at Wells Fargo Securities (Investment Banking, Stanford, 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.