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. 005How can a company have negative EBITDA but positive free cash flow?AccountingIntermediatetechnicalWells 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

   1. 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.
   2. 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.
   3. Low or zero CapEx helps, since free cash flow is after capital spending.
   4. Big non-cash charges below EBITDA do not explain it, because they are already excluded from EBITDA. It has to be balance sheet movement.
   5. 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.

2. 011What is the difference between a finance lease and an operating lease, and which one affects valuation?AccountingIntermediatetechnicalMizuhoInvestment 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

   1. Finance lease treats you as the economic owner. Depreciation sits in EBITDA, interest sits below it, so EBITDA is higher.
   2. Operating lease keeps the full rent inside operating expenses, so EBITDA is lower.
   3. That means two companies with identical economics can show very different EBITDA depending on classification. It directly distorts EV/EBITDA comps.
   4. 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.
   5. 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.

3. 012Do a DuPont analysis for a hospital business.AccountingIntermediatetechnicalCSCredit SuisseInvestment Banking · Mumbai · 2020

   Say this

   DuPont splits return on equity into net margin, asset turnover and leverage. For a hospital the story is almost always thin margins, heavy assets and therefore low turnover, with leverage doing a lot of the work on ROE.

   Then walk it

   1. ROE equals net margin times asset turnover times the equity multiplier. Three levers, and each one tells a different operating story.
   2. Net margin for a hospital is driven by payer mix and case mix. Private-pay and high-acuity surgical work carry far better margin than government-scheme volume.
   3. Asset turnover is structurally low, because you have bought land, a building and imaging equipment. The operating metric behind it is occupancy and average revenue per occupied bed.
   4. That heavy asset base is why leverage matters so much. Hospitals fund expansion with debt, so the equity multiplier is doing real work in the ROE.
   5. The banker's conclusion: a hospital chain improves ROE mainly by filling existing beds and shifting case mix, not by cutting costs. Incremental occupancy has almost no marginal cost.

   Where candidates lose it

   Reciting the DuPont formula and stopping. The question names a hospital on purpose. If you cannot say what drives each of the three terms for that specific business, you have shown formula recall and nothing else.

   Expect next

   • Which of the three levers would you push first?
   • What metrics would you ask the CFO for?
   • How would this look different for a diagnostics chain?

   Reported by candidates at Credit Suisse (Investment Banking, Mumbai, 2020). Source: Wall Street Oasis.

4. 013What is the effect on the three statements of selling an asset?AccountingIntermediatetechnicalJefferiesEquity Research · New York · 2026

   Say this

   It depends on whether you sell above or below book value. Say book value is $100 and you sell for $120. You book a $20 gain on the income statement, cash rises by $120, and the asset comes off the balance sheet at $100.

   Then walk it

   1. Income statement: a $20 gain, taxed. At 25% that is $15 of net income.
   2. Cash flow statement: start from net income at $15, reverse out the full $20 non-cash gain, then show the $120 proceeds in investing. Net cash change is $115, which is the $120 received less the $5 of tax.
   3. Balance sheet: cash up $115, the asset down $100, retained earnings up $15. It balances.
   4. The gain gets reversed out of operating cash flow because it is not operating, and the whole proceeds are shown in investing. Otherwise you would count the gain twice.
   5. If you sold below book you would book a loss, get a tax benefit, and the mechanics run the same way in reverse.

   Where candidates lose it

   Leaving the gain in cash from operations and also putting the proceeds in investing. That double-counts. The reversal of the gain in the operating section is the entire technical content of this question.

   Expect next

   • What if you sold it at exactly book value?
   • How would this show up in an equity research model?
   • Would you adjust EBITDA for the gain?

   Reported by candidates at Jefferies (Equity Research, 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.