Investment Banking interview preparation

Questions

100

Traced to a firm

100

Firms

46

Updated

September 2026

Asked at

All firmsTSTruist Securities10Rothschild & Co8Centerview Partners7CSCredit Suisse7HWHarris Williams6Houlihan Lokey6Lazard6Mizuho6Barclays5Citi5Deutsche Bank5Evercore5Moelis & Company5MSMorgan Stanley5Piper Sandler5RCRBC Capital Markets5Goldman Sachs4Nomura4TD Securities4Bank of America3GSGuggenheim Securities3J.P. Morgan3Jefferies3Moody's3Perella Weinberg Partners3WPWarburg Pincus3WBWilliam Blair3HSBC2Lincoln International2Scotiabank2TPTPG2UBS2Wells Fargo Securities2Advent International1Apollo Global Management1Bain Capital1Balyasny Asset Management1BLBlackRock1BPBNP Paribas1General Atlantic1Invesco1Morningstar1PIMCO1STSociété Générale1SSState Street1WMWellington Management1

Topic

All topicsAccounting14Valuation21M&A10Markets and deals10Capital markets3LBO8Leveraged finance3Restructuring2Credit3Debt capital markets2Capital structure2Case and estimation11Brainteasers6Fit5

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseBrainteaserFitMarket view

1. 064What credit metrics would you look at when analysing a company like Nike?CreditIntermediatetechnicalTSTruist SecuritiesLeveraged Finance · Atlanta · 2024

   Say this

   Leverage and coverage first: net debt to EBITDA and EBITDA to interest. Then cash conversion, free cash flow to debt, and the maturity profile. For a consumer brand I would add inventory days, because that is where the trouble shows up first.

   Then walk it

   1. Leverage: net debt to EBITDA, and gross leverage too, since cash can be trapped offshore or needed for operations. For an investment grade consumer name you would expect well under two times.
   2. Coverage: EBITDA or EBIT to interest expense, and the tighter test, free cash flow after CapEx and dividends against interest.
   3. Cash conversion: free cash flow to total debt, and EBITDA to free cash flow, which tells you how much of the reported profit is real.
   4. Liquidity and maturities: cash on hand plus undrawn revolver against the next two years of maturities. A profitable company still defaults if it cannot refinance.
   5. For Nike specifically: inventory days and the gap between revenue growth and inventory growth. When inventory grows faster than sales in a branded consumer business, discounting and a gross margin hit are coming. I would also look at wholesale versus direct mix and geographic concentration.

   Where candidates lose it

   Reciting generic credit ratios and ignoring that they named a specific company. The sector-specific metric, inventory in this case, is what shows you can actually underwrite rather than recite. Always bring one metric that fits the named business.

   Expect next

   • What line items would you look at to assess creditworthiness?
   • How would you assess a good borrower?
   • How would you qualitatively assess an entity for a rating?

   Reported by candidates at Truist Securities (Leveraged Finance, Atlanta, 2024). Source: Wall Street Oasis.

2. 065What specific line items would you look at on the financial statements when evaluating creditworthiness?CreditIntermediatetechnicalRCRBC Capital MarketsCorporate Banking · New York · 2026Wells Fargo SecuritiesGeneralist · North Carolina · 2025

   Say this

   Cash flow from operations, because that is what repays debt. Then interest expense, total debt and its maturity schedule, cash, the undrawn revolver, CapEx, and the working capital lines.

   Then walk it

   1. Start with cash from operations across several years. One good year proves nothing; consistency through a downturn proves a lot.
   2. Interest expense against EBITDA gives coverage. Debt and the maturity schedule tell you when the pressure comes.
   3. Cash and the undrawn facility are the liquidity buffer. Compare them to the next 12 to 24 months of obligations.
   4. CapEx split into maintenance and growth. Maintenance CapEx is non-discretionary, so it competes with debt service. Growth CapEx can be cut in a bad year, which is a real source of flexibility.
   5. Then the working capital lines, receivables, inventory and payables, because deterioration shows up there before it reaches the income statement. Rising receivable days means customers are struggling or revenue is being pushed.
   6. And off the face of the statements: operating lease liabilities, pension deficits, guarantees and contingent liabilities in the notes. Those are real claims that do not sit in the debt line.

   Where candidates lose it

   Staying on the income statement. Credit is about cash and claims, so the answer lives on the cash flow statement and in the notes. Mentioning the notes, and specifically contingent liabilities, is what separates a credit answer from an equity answer.

   Expect next

   • How would you assess a good borrower qualitatively?
   • What would you ask the CFO if you were the lead analyst?
   • How do you determine whether a company is good for credit investing?

   Reported by candidates at RBC Capital Markets (Corporate Banking, New York, 2026); Wells Fargo Securities (Generalist, North Carolina, 2025). Source: Wall Street Oasis.

3. 067Walk me through the syndication process.Debt capital marketsIntermediatetechnicalScotiabankDebt Capital Markets · New York · 2026

   Say this

   The arranging bank commits to the borrower, then sells the loan down to other lenders. Underwrite and mandate, prepare the information memorandum and ratings, launch to a lender group, build the book, then allocate, close and fund.

   Then walk it

   1. Mandate and structure: the bank agrees the terms and either underwrites, meaning it guarantees the full amount and takes the risk of selling it, or arranges on a best-efforts basis.
   2. Preparation: build the information memorandum and the model, get ratings from the agencies if it is a rated deal, and agree the credit agreement terms with the borrower.
   3. Launch: a bank meeting or lender call presents the credit. Then a commitment period, usually one to two weeks, during which institutional investors submit orders at a price.
   4. Price discovery and flex: if the book is undersubscribed the arranger uses flex language to widen pricing or tighten terms. If it is oversubscribed they tighten. This is the part that makes underwriting risky.
   5. Allocation, documentation, closing and funding. Then the paper trades in the secondary market, which is where the loan's price is discovered from then on.
   6. The risk that matters commercially: in an underwritten deal, if the market gaps between commitment and syndication, the bank is left holding paper it has to sell at a loss. That is hung debt, and it is why underwriting fees exist.

   Where candidates lose it

   Describing it as a simple sequence and missing flex and underwriting risk. The commercial substance of syndication is who bears the market risk between commitment and sell-down. Name flex language and hung debt.

   Expect next

   • Tell me about the two different types of loans in the broadly syndicated loan market.
   • What is market flex?
   • What happens if the deal does not clear?

   Reported by candidates at Scotiabank (Debt Capital Markets, New York, 2026). Source: Wall Street Oasis.

4. 069Explain the different ways a firm might finance itself, besides straight equity and debt.Capital structureIntermediatetechnicalHSBCGeneralist · New York · 2024TSTruist SecuritiesCorporate Banking · Atlanta · 2025

   Say this

   Everything in between: convertible bonds, preferred stock, mezzanine and PIK, plus asset-based routes like securitisation, sale-leaseback, factoring and equipment leasing. And structural options like a rights issue or a convertible preferred.

   Then walk it

   1. Hybrid instruments sit between the two: convertible bonds give a low coupon in exchange for equity upside, preferred stock ranks ahead of common with a fixed dividend, and mezzanine or PIK sits below senior debt with equity warrants attached.
   2. Asset-based financing monetises specific assets rather than the whole enterprise: asset-backed lending against receivables and inventory, securitisation of a receivables pool, factoring, and equipment leasing.
   3. Sale-leaseback converts owned real estate into cash while keeping the operational use. It is off-balance-sheet in spirit, though under current standards the lease liability comes back on.
   4. Operational financing is often overlooked: stretching supplier terms, customer prepayments and deferred revenue are all working capital funding, and they cost nothing.
   5. And there are equity variants: rights issues to existing holders, PIPEs, convertible preferred for a strategic investor, and in some markets government or development-bank funding for specific projects.
   6. The structuring logic is to match the funding to the asset. Long-lived assets get long-dated debt, receivables get revolving asset-based facilities, and uncertain growth gets equity or something convertible.

   Where candidates lose it

   Listing instruments with no organising principle. Group them, hybrids, asset-based, operational, equity variants, and finish with the matching principle. A list without a frame reads like flashcards.

   Expect next

   • When would you advise a convertible over straight equity?
   • What are the primary categories of collateral securing an asset-based loan?
   • What is the difference between a loan and a bond?

   Reported by candidates at HSBC (Generalist, New York, 2024); Truist Securities (Corporate Banking, Atlanta, 2025). Source: Wall Street Oasis.

5. 070What happens to EPS if a company issues debt to buy back shares?Capital structureIntermediatetechnicalDeutsche BankInvestment Banking · San Francisco · 2025

   Say this

   EPS usually rises, because the share count falls faster than net income does. It is accretive as long as the after-tax cost of the new debt is below the earnings yield of the stock you are buying.

   Then walk it

   1. Net income falls by the after-tax interest on the new debt. Share count falls by the shares repurchased. EPS is the ratio, so the direction depends on which falls proportionally more.
   2. The test: compare the after-tax cost of debt to the stock's earnings yield, which is the inverse of its P/E. Debt at 6 percent pre-tax is 4.5 percent after tax. A stock at 15 times P/E has a 6.7 percent earnings yield. Accretive.
   3. Flip it: a stock at 30 times P/E has a 3.3 percent earnings yield, below the 4.5 percent after-tax cost. Dilutive. Which is why expensive stocks should issue equity, not buy it back.
   4. Say the number to prove you can do it: $1,000 of debt at 6 percent costs $45 after tax at a 25 percent rate. If that buys 100 shares out of 1,000 and net income was $100, EPS goes from $0.10 to $55 over 900 shares, which is $0.061. Dilutive in that case, and the arithmetic tells you immediately.
   5. Then the value point: higher EPS does not mean more value. You have raised leverage, so the equity is riskier and the multiple should compress. Rearranging the capital structure does not create value on its own.

   Where candidates lose it

   Answering 'EPS goes up' with no condition. It depends entirely on the relationship between the cost of debt and the earnings yield. And stopping at EPS without noting that the multiple should fall as leverage rises.

   Expect next

   • So when is a buyback value-destructive?
   • What are the different ways to use excess cash?
   • How does this change the company's WACC?

   Reported by candidates at Deutsche Bank (Investment Banking, San Francisco, 2025). Source: Wall Street Oasis.

6. 086What are the formulas for net revenue retention, gross retention and churn?Case and estimationIntermediatetechnicalPiper SandlerInvestment Banking · Burlingame · 2026

   Say this

   All three measure the same cohort a year later. Gross retention counts only what you kept, capped at 100 percent. Net retention adds expansion, so it can exceed 100. Churn is the revenue you lost as a percentage of what you started with.

   Then walk it

   1. Gross revenue retention: starting recurring revenue from a cohort, less churn and downgrades, divided by starting revenue. Expansion is excluded, so it can never exceed 100 percent.
   2. Net revenue retention: starting revenue, less churn and downgrades, plus upsell and expansion, divided by starting revenue. Above 100 percent means the base grows by itself.
   3. Gross churn: revenue lost divided by starting revenue. It is one minus gross retention. Logo churn counts customers rather than revenue, and the two can diverge sharply if you lose many small accounts or one large one.
   4. The critical rule: neither retention metric includes revenue from new customers. Mixing new business into retention is the most common error and it flatters the number badly.
   5. Benchmarks worth knowing: best-in-class enterprise SaaS runs gross retention above 90 percent and net above 120. SMB software runs materially lower on both because small customers fail.
   6. Why it matters for valuation: net retention above 110 percent means the business compounds without selling, which is exactly what justifies a high revenue multiple.

   Where candidates lose it

   Including new customer revenue in the retention calculation. It is a cohort metric. And not knowing which one can exceed 100 percent, which immediately reveals whether you have actually used these numbers.

   Expect next

   • What is the rule of forty?
   • Which matters more for valuation, growth or retention?
   • Why can logo churn and revenue churn diverge?

   Reported by candidates at Piper Sandler (Investment Banking, Burlingame, 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.