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. 001Walk me through the three financial statements and how they connect.AccountingCorephone / HireVueGoldman SachsInvestment Banking · New York · 2026GSGuggenheim SecuritiesHealthcare · Glen Allen · 2026Piper SandlerInvestment Banking · New York · 2026TSTruist SecuritiesReal Estate · Atlanta · 2026Moody'sCorporate · New York · 2022

   Say this

   The income statement shows profitability over a period, the balance sheet is a snapshot of what the company owns and owes at a point in time, and the cash flow statement reconciles the two by tracking the actual cash that moved. They link through net income and cash.

   Then walk it

   1. Net income is the bottom of the income statement. It becomes the top line of the cash flow statement.
   2. On the cash flow statement you add back non-cash charges like depreciation, adjust for working capital changes, then run through investing and financing.
   3. The ending cash number flows to the top of the balance sheet as the cash balance.
   4. Net income also flows into retained earnings in shareholders' equity, less any dividends. That is the second link.
   5. So the balance sheet balances because both sides of net income land in it: the cash it generated on the asset side, the earnings it retained on the equity side.

   Where candidates lose it

   Reciting the three statements as three separate definitions and stopping. The question is entirely about the linkage. Say the two connection points out loud, net income into retained earnings and ending cash onto the balance sheet, or you have not answered it.

   Expect next

   • Which statement would you look at first if you could only pick one, and why?
   • A company is profitable but running out of cash. Where do you look?
   • Why does the balance sheet actually balance?

   Reported by candidates at Goldman Sachs (Investment Banking, New York, 2026); Guggenheim Securities (Healthcare, Glen Allen, 2026); Piper Sandler (Investment Banking, New York, 2026); Truist Securities (Real Estate, Atlanta, 2026); Moody's (Corporate, New York, 2022). Source: Wall Street Oasis.

2. 002Tell me how $10 of depreciation flows through the three statements.AccountingCoretechnicalCSCredit 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

   1. 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.
   2. 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.
   3. 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.
   4. 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.

3. 003Walk me through the three statements at the point of purchase and then after year one, given $100 of deferred revenue over two years.AccountingHardsuperdayCenterview PartnersInvestment Banking · New York · 2026Piper SandlerInvestment Banking · Houston · 2026

   Say this

   At the moment of sale, cash goes up $100 and deferred revenue, a liability, goes up $100. Nothing touches the income statement yet. After year one, $50 is recognised as revenue, so the liability halves and earnings finally show up.

   Then walk it

   1. Day one: cash up $100 on the asset side, deferred revenue up $100 on the liability side. Income statement untouched, because you have been paid but have not delivered.
   2. Year one: recognise $50 of revenue. At a 25% tax rate that is $37.50 of net income, assuming no costs for simplicity.
   3. Cash flow: net income up $37.50, then a working capital adjustment of minus $50 as deferred revenue unwinds. So cash from operations is minus $12.50 for the year, which is just the tax you paid.
   4. Balance sheet: cash down $12.50 from the year-one peak, deferred revenue down to $50, retained earnings up $37.50.
   5. The economic story is that a subscription business collects cash long before it books profit. That is why deferred revenue growth is a leading indicator.

   Where candidates lose it

   Recognising the revenue on day one. Cash received is not revenue earned. Also, candidates forget the working capital drag in year one and end up with a balance sheet that does not balance. Do the liability and the revenue in the same breath.

   Expect next

   • Would you rather own a business with growing or shrinking deferred revenue, and why?
   • How does deferred revenue affect a DCF?
   • What happens to deferred revenue in an acquisition?

   Reported by candidates at Centerview Partners (Investment Banking, New York, 2026); Piper Sandler (Investment Banking, Houston, 2026). Source: Wall Street Oasis.

4. 004How do you get from EBITDA to net income?AccountingCoretechnicalGSGuggenheim SecuritiesInvestment Banking · Chicago · 2026TSTruist SecuritiesCorporate Banking · Atlanta · 2025

   Say this

   Subtract depreciation and amortisation to get EBIT, subtract interest to get pre-tax income, then subtract taxes to get net income. If there is anything below the line like minority interest or discontinued operations, strip that out too.

   Then walk it

   1. EBITDA less D&A gives EBIT, which is operating profit.
   2. EBIT less net interest expense gives pre-tax income, sometimes called EBT.
   3. EBT less taxes gives net income.
   4. Watch for minority interest. If the company consolidates a subsidiary it does not fully own, you subtract the minority's share to get to net income attributable to the parent.
   5. That last step matters for EPS, because EPS is built on net income to the parent, not consolidated net income.

   Where candidates lose it

   Forgetting minority interest and preferred dividends. On a clean question nobody cares, but the moment the interviewer hands you a consolidated group, missing the minority line means your EPS is wrong and your comps are wrong.

   Expect next

   • Why do bankers use EBITDA at all if net income is what shareholders get?
   • When would EBITDA be a misleading metric?
   • How do you calculate free cash flow from cash flow from operations?

   Reported by candidates at Guggenheim Securities (Investment Banking, Chicago, 2026); Truist Securities (Corporate Banking, Atlanta, 2025). Source: Wall Street Oasis.

5. 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.

6. 006Explain how an increase in accounts payable affects free cash flow.AccountingCoretechnicalPerella Weinberg PartnersInvestment Banking · Chicago · 2026Perella Weinberg PartnersInvestment Banking · New York · 2026

   Say this

   It increases free cash flow. An increase in a liability means you have taken the goods but not yet paid, so cash stays in the business. It is a source of cash.

   Then walk it

   1. Accounts payable up means cash held back, so it is a positive working capital adjustment on the cash flow statement.
   2. The general rule: liabilities up is a source of cash, assets up is a use of cash.
   3. It does not touch EBITDA or EBIT at all. The expense was already recognised; only the timing of payment changed.
   4. So unlevered free cash flow rises by exactly the increase in payables, with no tax effect.
   5. Worth flagging the quality issue: stretching payables to flatter cash flow is a classic window-dressing move, and it reverses the next period.

   Where candidates lose it

   Getting the direction right but saying nothing about durability. Anyone can memorise the sign. The candidate who adds 'this reverses next quarter and is a red flag if it keeps growing' is the one who sounds like an analyst.

   Expect next

   • Now do accounts receivable.
   • How would you spot a company stretching payables?
   • How do you treat a permanent step-up in payables in a DCF?

   Reported by candidates at Perella Weinberg Partners (Investment Banking, Chicago, 2026); Perella Weinberg Partners (Investment Banking, New York, 2026). Source: Wall Street Oasis.

7. 007What are some non-cash items you would find on the cash flow statement?AccountingCoretechnicalMoody'sProject Finance · New York · 2018LazardInvestment Banking · New York · 2026

   Say this

   Depreciation and amortisation, stock-based compensation, deferred taxes, impairments and write-downs, unrealised gains or losses on investments, and equity income from unconsolidated affiliates.

   Then walk it

   1. D&A is the big one and the one everyone names.
   2. Stock-based compensation is the one that matters most in practice, especially in tech, because it is a real cost to shareholders that never touches cash.
   3. Deferred tax movements, impairments and goodwill write-downs are all added back.
   4. Equity method income gets reversed out and replaced with the actual dividend received, because you only book cash you were paid.
   5. The judgement call is SBC. Adding it back and calling the result free cash flow overstates what shareholders actually keep, because the dilution is real.

   Where candidates lose it

   Listing D&A and stopping. Naming stock-based compensation, and then saying why treating it as a pure add-back is dishonest, is what separates a memoriser from someone who has actually thought about earnings quality.

   Expect next

   • Should stock-based compensation be added back in a DCF?
   • How do you handle it when you are comparing a tech company to an industrial?
   • What is the difference between deferred tax assets and liabilities?

   Reported by candidates at Moody's (Project Finance, New York, 2018); Lazard (Investment Banking, New York, 2026). Source: Wall Street Oasis.

8. 008Walk me from revenue down to unlevered free cash flow.AccountingCoretechnicalRCRBC Capital MarketsLeveraged Finance · London · 2026Centerview PartnersInvestment Banking · Menlo Park · 2025

   Say this

   Revenue less COGS and operating expenses gives EBIT. Tax EBIT at the marginal rate to get after-tax EBIT, add back D&A, subtract CapEx, then subtract the increase in net working capital.

   Then walk it

   1. Start at EBIT, not net income, because unlevered means before any financing decision.
   2. Multiply EBIT by one minus the tax rate. This is the step people rush: you tax EBIT, not EBITDA.
   3. Add back D&A because it is non-cash, but note you already got its tax benefit inside the taxed EBIT.
   4. Subtract CapEx, which is the real cash going into the asset base.
   5. Subtract the change in net working capital. Growth normally consumes working capital, so this is usually negative for a growing company.
   6. The result is cash available to all capital providers, debt and equity, which is why you discount it at WACC.

   Where candidates lose it

   Subtracting interest. The moment interest appears, it is levered, not unlevered, and you have double-counted the capital structure because WACC already prices the debt. Say 'no interest, because it is unlevered' out loud.

   Expect next

   • What is the difference between levered and unlevered free cash flow?
   • Which one do you discount at cost of equity?
   • If I gave you a $10 change in revenue, COGS, or CapEx, which moves your DCF most?

   Reported by candidates at RBC Capital Markets (Leveraged Finance, London, 2026); Centerview Partners (Investment Banking, Menlo Park, 2025). Source: Wall Street Oasis.

9. 009What is the difference between levered and unlevered free cash flow?AccountingCoretechnicalCSCredit SuisseData Modeling · Chicago · 2023

   Say this

   Unlevered free cash flow is before interest and debt movements, so it belongs to everyone who funded the business. Levered free cash flow is after interest and mandatory debt repayment, so it belongs only to equity holders.

   Then walk it

   1. Unlevered starts at EBIT, taxes EBIT, and ignores the capital structure entirely.
   2. Levered starts effectively at net income, so interest and its tax shield are already inside it, and you then subtract debt amortisation.
   3. Unlevered gets discounted at WACC and gives you enterprise value. Levered gets discounted at cost of equity and gives you equity value directly.
   4. The reason the market defaults to unlevered is comparability. Two companies with identical operations but different leverage should show the same unlevered cash flow.
   5. Levered is what a sponsor actually cares about in an LBO, because that is the cash that services and pays down the debt.

   Where candidates lose it

   Discounting unlevered cash flow at cost of equity, or levered at WACC. That mismatch is the single most common valuation error in interviews and it invalidates the whole answer.

   Expect next

   • So which do you get to, enterprise value or equity value?
   • Why does the market default to unlevered?
   • When would you actually build a levered DCF?

   Reported by candidates at Credit Suisse (Data Modeling, Chicago, 2023). Source: Wall Street Oasis.

10. 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.

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.