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. 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.

2. 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.

3. 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.

4. 014Walk me through what OpenAI's income statement probably looks like.AccountingHardsuperdayLazardInvestment Banking · San Francisco · 2026

   Say this

   Large and fast-growing revenue from subscriptions and API usage, a gross margin far below normal software because inference costs real compute, then enormous R&D and compute spend that puts operating income deeply negative.

   Then walk it

   1. Revenue splits into consumer subscriptions, enterprise seats, and API consumption. The API line is usage-based, so it behaves more like a utility than like seat-based SaaS.
   2. Cost of revenue is the interesting part: every query costs GPU time. That is why gross margin sits well below the 75 to 85 percent you would expect from software.
   3. Below that, R&D dominates, and most of it is training compute plus a small number of very expensive people.
   4. Sales and marketing is unusually light for the growth rate, because distribution has been largely organic.
   5. So the shape is high growth, compressed gross margin, and a big operating loss funded by capital rather than cash flow. If I were valuing it I would care most about whether inference cost per query is falling faster than usage is rising.

   Where candidates lose it

   Treating it as generic SaaS with 80% gross margins. The entire point of the question is whether you understand that inference is a variable cost of goods sold. Name that and you have answered it, even if every number you guess is wrong.

   Expect next

   • How would you value it then?
   • What would you need to believe for this to be worth its last round?
   • Compare the business model to Microsoft's.

   Reported by candidates at Lazard (Investment Banking, San Francisco, 2026). Source: Wall Street Oasis.

5. 015Walk me through a DCF.ValuationCoretechnicalGoldman SachsInvestment Banking · New York · 2026Deutsche BankInvestment Banking · Honolulu · 2025BarclaysInvestment Banking · New York · 2025TSTruist SecuritiesCorporate Banking · Atlanta · 2025Houlihan LokeyDebt Capital Markets · Los Angeles · 2025CSCredit SuisseInvestment Banking · São Paulo · 2021

   Say this

   Project unlevered free cash flow for five to ten years, discount it at WACC, add a terminal value for everything beyond the forecast, sum to enterprise value, then bridge to equity value and divide by diluted shares.

   Then walk it

   1. Build unlevered free cash flow: EBIT, taxed, plus D&A, less CapEx, less the change in working capital.
   2. Discount at WACC, because unlevered cash flow belongs to both debt and equity holders. Use mid-year convention if cash arrives through the year.
   3. Terminal value two ways: Gordon growth on the final year cash flow, or an exit multiple on terminal EBITDA. I would run both and check they agree.
   4. Sum the discounted cash flows and the discounted terminal value to get enterprise value.
   5. Bridge down: less net debt, less preferred, less minority interest, plus non-operating assets, to get equity value. Divide by diluted shares for value per share.
   6. Then say the honest part: terminal value is usually 60 to 80 percent of the total, so the answer is mostly a function of the growth rate and discount rate, and I would sensitise both.

   Where candidates lose it

   Delivering it as a memorised list with no acknowledgement that terminal value dominates. Every candidate can recite the steps. The one who volunteers that most of the value sits in an assumption, and offers to sensitise it, sounds like someone who has actually built one.

   Expect next

   • What are the main drivers or sensitivities in your DCF?
   • What discount rate would you use and why?
   • When is a DCF the wrong tool?

   Reported by candidates at Goldman Sachs (Investment Banking, New York, 2026); Deutsche Bank (Investment Banking, Honolulu, 2025); Barclays (Investment Banking, New York, 2025); Truist Securities (Corporate Banking, Atlanta, 2025); Houlihan Lokey (Debt Capital Markets, Los Angeles, 2025); Credit Suisse (Investment Banking, São Paulo, 2021). Source: Wall Street Oasis.

6. 016What are the main drivers or sensitivities in a DCF?ValuationIntermediatetechnicalTD SecuritiesInvestment Banking · New York · 2026Moelis & CompanyInvestment Banking · New York · 2026

   Say this

   The discount rate and the terminal value assumption, by a wide margin. After those, the revenue growth and margin path in the forecast years, then CapEx and working capital intensity.

   Then walk it

   1. WACC dominates because it compounds. A 100 basis point move in WACC can swing value 15 to 20 percent for a long-duration business.
   2. Terminal value is the other big one, since it is usually 60 to 80 percent of enterprise value. A 50 basis point change in perpetuity growth moves the answer materially.
   3. Inside the forecast, margin matters more than revenue for most mature businesses, because a margin point drops straight to cash.
   4. CapEx and working capital intensity matter most for capital-hungry or fast-growing companies, where growth consumes cash.
   5. The standard output is a two-way sensitivity table, WACC against exit multiple or against perpetuity growth. That grid is what actually goes in the deck, not a single point value.

   Where candidates lose it

   Listing revenue growth first. It feels intuitive but it is wrong for most businesses; discount rate and terminal value swamp it. Also, saying 'a DCF gives you the intrinsic value' as if it were one number, rather than a range you present as a football field.

   Expect next

   • Given a $10 change in revenue, COGS, or CapEx, which has the biggest impact?
   • How do you pick the perpetuity growth rate?
   • What would you do if the DCF value is miles above the trading price?

   Reported by candidates at TD Securities (Investment Banking, New York, 2026); Moelis & Company (Investment Banking, New York, 2026). Source: Wall Street Oasis.

7. 017Given a $10 change in revenue, COGS, or CapEx, which has the highest impact on a DCF?ValuationHardtechnicalMizuhoInvestment 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

   1. A $10 increase in CapEx is a straight $10 reduction in unlevered free cash flow that year. Dollar for dollar.
   2. 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.
   3. A $10 increase in COGS reduces EBIT by $10 and costs $7.50 of cash flow after tax.
   4. So per dollar, CapEx bites hardest in the year it happens.
   5. 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.

8. 018What is WACC and how do you calculate it?ValuationCorephone / HireVueCitiGeneralist · New York · 2026

   Say this

   It is the blended after-tax cost of a company's capital, weighted by the market value of each piece. Cost of equity times the equity weight, plus after-tax cost of debt times the debt weight.

   Then walk it

   1. Cost of equity comes from CAPM: risk-free rate plus beta times the equity risk premium, with a size or country premium if the situation calls for it.
   2. Cost of debt is the yield the company would pay on new debt today, not the coupon on its old debt, and you multiply it by one minus the tax rate because interest is deductible.
   3. Weights use market values, not book. Market capitalisation for equity, and market value of debt, which for most investment grade paper is close enough to book.
   4. Use target capital structure rather than today's snapshot if today's is temporarily distorted.
   5. The honest caveat is beta. It is estimated from noisy historical data, so I would cross-check against a peer set rather than trusting one regression.

   Where candidates lose it

   Using the coupon on existing debt as the cost of debt, or using book equity in the weights. Both are common and both are wrong. WACC is forward-looking and market-based.

   Expect next

   • Why do you unlever and relever beta?
   • Can debt ever be more expensive than equity?
   • What happens to WACC as you add leverage?

   Reported by candidates at Citi (Generalist, New York, 2026). Source: Wall Street Oasis.

9. 019Why do you unlever and relever beta, and why does it matter?ValuationIntermediatetechnicalHWHarris WilliamsInvestment Banking · Los Angeles · 2025

   Say this

   Observed beta reflects both the business risk and the leverage of each peer. You unlever to strip out their capital structures so you are comparing pure business risk, then relever at your target's structure.

   Then walk it

   1. Pull raw betas for the peer set. Each one is contaminated by that company's own debt load.
   2. Unlever each: asset beta equals equity beta divided by one plus one minus tax times debt over equity. Now you have pure business risk.
   3. Take the median or mean of the unlevered betas. Median is safer because one over-levered peer can drag a mean badly.
   4. Relever at your target's capital structure, or its target structure if you expect it to change.
   5. It matters because skipping it means you have imported someone else's leverage into your cost of equity. In an LBO, where structure changes by design, getting this wrong makes the whole discount rate meaningless.

   Where candidates lose it

   Knowing the formula but not the purpose. If asked 'why does it matter', the answer is comparability of business risk. Say that first, then the mechanics.

   Expect next

   • Would you use median or mean of the unlevered betas?
   • What is the beta of a slot machine?
   • How would you get a beta for a private company?

   Reported by candidates at Harris Williams (Investment Banking, Los Angeles, 2025). Source: Wall Street Oasis.

10. 020What is the beta of a slot machine?ValuationHardsuperdayRothschild & CoMergers and Acquisitions · New York · 2021Rothschild & CoGeneralist · New York · 2026

    Say this

    Zero. A slot machine's payout is random but the randomness is entirely idiosyncratic, and beta only measures the part of risk that moves with the market. Uncorrelated risk carries no beta.

    Then walk it

    1. Beta is covariance with the market divided by the variance of the market. If the payout is independent of the market, the covariance is zero, so beta is zero.
    2. The machine is enormously risky in a standard deviation sense. That is exactly the point: total volatility and systematic risk are different things.
    3. This is CAPM's central claim. The market only pays you for risk you cannot diversify away, and pure gambling risk diversifies to nothing across many pulls.
    4. The sharp extension: a casino's equity beta is clearly not zero, because discretionary gambling spend rises and falls with the economy. The machine's payout is uncorrelated; the volume of people playing it is not.
    5. So the answer is zero for the mechanism, positive for the business built on it.

    Where candidates lose it

    Answering 'very high, because it is so risky'. That confuses volatility with systematic risk and tells the interviewer you do not really understand CAPM. Get to zero fast, then earn the extra credit with the casino distinction.

    Expect next

    • So why is a casino's beta not zero?
    • How would you value your favourite animal?
    • What is your personal beta?

    Reported by candidates at Rothschild & Co (Mergers and Acquisitions, New York, 2021); Rothschild & Co (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.