After doing a bachelor’s degree in finance or accounting, people prefer the job related to the financial analyst. However, cracking a job related to the financial analyst is challenging, as the financial analyst interview questions might be difficult, and people worry about it. But through this article, people can crack the financial analyst job by the given financial analyst interview questions that may help people understand more about the financial analyst and allow people to know which type of financial analyst interview questions will be asked in the round of interviews. Therefore, the following article consists of financial analyst interview questions, finance interview questions, top financial analyst types of questions that will be beneficial for all that youth trying to get financial analyst jobs.
Before knowing the financial analyst interview questions, let us know the job of financial analysts. So basically, financial analysts are the persons that conduct a type of quantitative analysis that contains information that will be affecting the investment programs that are done by public or private kinds of institutions. Financial analysts will assess the performance of stocks, bonds, and investments of other types. A type of guidance to the individuals or businesses trying to make any investment decisions. People, as financial analysts, take and note down information about the investments, assemble the spreadsheets, write types of reports on them, and finally, review any non-legal pertinent things or information relating to the prospective deals. There are also many people as financial analysts who have been certified as public accountants that are CPAs. There is another type of financial analyst account named a chartered financial analyst, and they are CFA. Most people recommend being a chartered financial analyst, that is, CFA.
Skills required to be a financial analyst:
Most of the people who hire a financial analyst prefer the following skills in a person, there are few skills mentioned below that fit the needs of skills in financial analyst:
- Expert-level analytical and financial modeling skills may help the company benefit from the financial analyst they have hired.
- Strategic thinking is mandatory in a person for being a financial analyst.
- Excellent presentation skills to express their views.
- The ability to influence and persuade can help the customers or clients understand what the financial analyst is trying to say.
- Strong understanding of Sarbanes- Oxley
- Time management to handle things quickly and effectively and organizational ability to sort things if there is something messy
- The ability to multitask may help the financial analyst to manage the burden of work.
- Constant deadlines should be matched with the behavior and work submission of the financial analyst.
- Willingness to work for long hours may be helpful if it is necessary to work overtime.
Education requirements for a financial analyst:
For a basic financial analyst job, a person should mandatorily have a bachelor’s degree in either the field of accounting, finance, economics, business administration, statistics, and another field related to that. For a higher post-application in the job of financial analyst, a person should have specific certifications like Chartered Financial Analyst (CFA) credentialing.
Resume of financial analyst:
While applying to a job, a resume should be made and while going to an interview the resume should be taken by them. The resume contains brief information of the applicant that contains the education status, maternity status, place of education, skills of the applicant, languages that the applicant speaks, and most important the contact details of the applicant. Initially, the objective of the resume that will be on the top of the resume should be written effectively and if that is written well then the employee will go ahead and read the rest of the resume. The resume objective contains a short 5 lines passage description about the applicant.
Requirements for the job of a financial analyst
For the job of financial analyst, a person should have a strong accounting and compliance type background that will help in exploring historical financial data, drive the process, predict future results and explore policy improvements. Following are the responsibilities of a financial analyst:
- The financial analyst must analyze the financial data and performance of an applicant.
- A financial analyst must prepare reports and projects based on the past and current analysis of an applicant or client.
- A financial analyst should evaluate the current expenditures of capital and depreciation.
- They should be good at establishing and evaluating profit plans for the company if it is necessary
- A financial analyst should provide economic models and forecast them.
Tips to crack financial analyst interview questions
Know about the employer: initially, the applicant must know where they are going to work and how is the behavior of the employer. The applicant can know about the employer through employees or ex-employees working at that place.
Interest in the company: the applicant must show their interest and they should make sure that the employer knows why they want to work in that company. The applicant should not use any kind of negative words that may create a negative impact about the applicant on the employer.
First impression: as everyone says the first impression is the last. So, the first impression of the applicant must be good and the employer must be happy and impressed by the applicant’s attitude and way of talking.
Experience matters: the employer will like to listen about the experience that the applicant has. Whether the experience is high for 8-9 years or low for 2-3 years, the experience must be shared with the employer that will show applicants’ dedication towards work.
Answer as many as financial analyst interview questions: no one is perfect in the world, but the imperfections must be shown positively. Likewise, if the applicant doesn’t know the answer to a question asked by the employer then he should not panic and say no rather than that an applicant should say that he knows other answers and prolong that.
Courses that can help in financial analyzing
There are many courses in the world that can be related to many fields of career. Every career has a course to understand their concept better. Here are a few courses that are taken by an applicant before the job of financial analyst to understand financial analyst interview questions and know more about the career of financial analyst. The courses are as follows:
- Chartered financial analyst (CFA) Certification
- Certified public accountant certification
- Certified financial planner designation
- Financial risk manager certification
- Chartered Alternative Investment Analyst designation
Following are jobs related to financial analyst:
Senior financial analyst, financial analysis manager, financial reporting manager, investment analyst, these jobs can be taken or selected after the experience of a financial analyst job and after qualifying a few more degrees or after studying a few more sources and gaining their certificates.
Entry level Financial analyst interview questions
Before understanding the financial analyst interview questions let us know all those questions related to behavior or character of a person in an interview and let us learn how to deal with it.
1. Why do you want to work as a financial analyst?
The answer to such financial analyst interview questions should be given in a manner that shows the interest and efficiency of the applicant to the employee. The answer can be given as ‘I want to serve as a financial analyst because I have a good knowledge in the field of finance and there is no chance that there is any other job good than financial analyst for a person with 4 years of experience in this field’ in this given answer the efficiency and need of the applicant can be expressed.
2. Where do you imagine your career in the next five years?
This type of question over trust in ourselves can hurt the employee. So the applicant should give a good and simple answer that will show the calm and down-to-earth behavior of the applicant. For example, the solution can be said as ‘in the next 5 years I see myself in the post of senior financial analyst in the XYZ company and I see myself serving them with all of my 100% of work.’
3. What if you have a tight deadline and it is hard to complete?
Here the employers want to see if the applicant is calm enough to handle every struggle or be worried and ruin the situation. The answer to this question should be given with a quiet smile and no worry on the face. The answer can be given as ‘if I meet a deadline that is tight then I will take some more time in my job from my particular time or I will do overtime in order to meet the deadline and satisfy the client’.
4. If there is more data and many types of data, how can you assure the accuracy of the client?
An employee asks these types of financial analyst interview questions to check whether the applicant will be attentive or just take the work for granted. So an applicant should handle this question by showing their attention towards the work. The answer to the given query can be said as ‘if there is a lot of data that has to be checked then I will ensure the client that I will check all the data and files by myself so that there will not be any kind of problems in the data given.’
5. From the past finance jobs what were your mistakes?
The answer should include a brief explanation about a few mistakes that most financial analysts do and if there is any mistake while doing their previous job. The answer can be written as ‘from the past finance job I have gained the experience and I have done mistakes related to the lack of hard work and dedication and I have done a mistake while assigning work to the lower staff but now with the experience and needs I have turned myself to be extra hard working with dedication and I have a good knowledge about assigning work to the lower staff’.
6. What are your strengths?
This is the most asked question in the history of interviews, an employer wants to know the presentation of the applicant that is why they ask these types of answers. By these answers, the applicant can show their way of presenting words. The answer can be written as ‘my strength is to help people in their specified work and my strength is that I can handle work pressure and still have 100% accuracy in the work given by clients’.
7. What is your weakness?
The answer should be effective enough that the weakness of the applicant should also be shown in a good manner to impress the employee. An employee can ask this question again to see the presentation of the applicant. So, the answer can be expressed as ‘my weakness is that I give low preference to myself and high preference to my work, my weakness is that I get involved with people very quickly and I can handle any kind of work pressure’.
8. Why do you want to work with us?
This question is stated as the most asked question in an interview. Even if the interview is of any physical type of work or any memory type of work, this question is asked mandatory. An applicant should tell the employee that the applicant is dedicated and excited to work with the company or organization. The answer can be as ‘I want to work in XYZ Company to gain experience and to understand the responsibilities of a financial analyst and I want to help the company with my skills to promote the company’s efficiency’.
Senior financial analyst interview questions and answers
1. What do you know about financial modeling?
Answer: financial modeling can be explained as a quantitative analysis that will commonly be used for either pricing of an asset or general corporate finance. Financial modeling is a process that takes all of the company’s earnings and expenses into final consideration to finalize the decisions that will be helpful in the future. Following are the task of financial analyst that is used as an impactful tool:
A financial analyst has the power to estimate the valuation of any business depending on their current work and current income
They can compare the competition that will help a company grow
A financial analyst will strategically plan their work and follow it
They test different scenarios to get the best out of what is present
Measuring the impact changes that have been made in economic policies is another task of financial analysts.
2. Tell me something about ‘cash flow statement’
Answer: there are about three main categories that are affected by cash flow and they are:
A financial analyst will calculate the total cash that has been stated to him with all the categories mentioned above. After calculating and adding a cash balance of the opening and after explaining all significant adjustments, a person will receive a slight change in cash.
3. What can be the best metric to analyze the stock of a company?
In order to analyze the stock of a company, there is no specific metric. But the answer can be written as follows:
Answer: a technical analyst uses the following types of charts:
Bar charts for helping in tracking highs and lows in the stock price
Point charts that will help to determine a stock momentum
Line charts that will be tracking all daily movements of a company.
4. What if the company is dealing with a good flow of cash and gets into trouble with finance? Is that possible?
Answer: yes the given scenario is possible. Now in those circumstances, we have 2 types of instances. They are:
A company is depending on its strong revenues for the present time and it is likely that in the future the forecasts say that the revenue on which the company is depending suddenly declines.
Or we can take instances like,
A company is going to be sealed soon but the payables that are delayed will show a good cash flow that is positive but still the company is in trouble and lost.
5. What is the most popular evaluation metric used for analyzing the stock of a company?
Answer: the price to earnings ratio can be stated as a popular evaluation metric that is used for analyzing the stocks of a company. The price to earnings or P/E ratio is a kind of metric that helps an investor to determine and assume the market value of a stock that will be compared to the company’s earnings that the company had. In simple words, the price to earnings is a type of method that shows the willingness of the market that they want to pay by on today’s date looking at the past and future income or earnings. This process is kind of easy and understandable and that’s why people use this kind of evaluation metric to analyze their stock record of the company.
6. Why is working capital given so much preference and what are the kinds of working capital?
Answer: working capital acts as the finance of the company and because of it only the company can deal with its current works and assets. The working capital can be calculated as the deduction of current assets and current liabilities. The working capital has importance because it analyzes the readily available money for daily essential works.
A company highlights their prior incidents when they have any kind of need for extra working capital.
7. What do you understand about NPV? Why is it used in the field of the financial analyst?
Answer: NPV in expanded form is known as Net Present Value. It is a difference that is given between the present value of cash outflows and the present value of the cash that inflows. Net present value is quite related to the financial analyst as it is used at the time of capital budgeting for analyzing the profitability that is gained by projection investment or by the project. With the help of Net present value, the work of financial analysts will be reduced and a person can understand more about their project than whether it is good in the future or loss in the future.
8. What can you say about cost accountancy?
Answer: so, basically cost accountancy contains the applications related to costing, its methods, cost accounting principles and it includes techniques to the art, science, and cost accountancy can give good practice of cost control and it also gives ascertainment related to profitability. By the cost accountancy, a person can get a presentation of information relating to managerial decision-making. Cost accountancy is access to the field of finance and cash. Cost accountancy gives basic information about cost accounting.
9. What are the kinds of financial statements?
Answer: there are mainly four types of financial statements are they are given as mentioned below:
Balance sheets: it is made as an annual sketch of all the expenses and gains a company has got in a particular financial year. All the expenses and the gains in the balance sheet will be of the same amount that will give brief information that a company has got a bill and name of every expense they have done.
Income statements: all the incomes that have been under the company are written on a statement named income statements. But not only incomes but also expenditures of the company are written here. The income statement gives accuracy to the company regarding the profit or loss of the month. The income statement is related to the balance sheet.
Cash flow statement: it shows the financial statement that will give the amount of cash and all of the equivalents. There are few components of the cash flow statement and they are; cash from investing activities, cash from operating activities, and cash from financing activities.
Shareholder’s equity statement shows the changes in the ownership interest of a company or the equity of shareholder right in the company right from the beginning of an accounting period and till the end of it. Four components are included in the shareholder’s equity calculation and they are outstanding shares, retained earnings and treasury stock, additional paid-in capital.
10. What is meant by capital structure?
Answer: the capital structure is defined as all of the views and planning of overall operations done with the different sources of funds. The capital structure also involves the growth taken by the company with the initial amount that funds have collected. Therefore, capital structure is necessary for a company to overcome its disproportionate assets and use its funds properly.
Advanced financial analyst interview questions
11. Explain ratio analysis.
Answer: the ratio analysis is basically and frequently used by financial analysts to get a good and deep insight into the company’s overall equity analysis with the help of financial statements. The analysis given by different types of rations will help a stakeholder to measure the profitability, operational efficiency, solvency status, and liquidity of a company. A stakeholder can get a deep view of the financial health of a company by pairing these ratio analyses with other types of essential financial metrics. After gaining the whole detail of the financial health of a company the stakeholder can decide to invest or not in the company. Rations are used in the process of overviewing a particular company.
Ratio analyzing can help in the following ways:
Compares the past performance of a company to the current version of a company
Avoids problems and financial risks that can happen
Reaches a company with surrounding other companies
Ratio analysis helps to make data-driven decisions strong
By the use of ratio analysis, a financial analyst can know the perfect view of a company.
Frequently used rations can be known as:
Solvency ratio and
P/ E dividend ratio
12. What is the difference between FCF that is Free Cash Flow and CF that is Cash Flow?
Answer: the cash that if left or available near the investors even after meeting cash needs like cash operating and investment expenditure is called FCF Free Cash Flow. The current value of a business can be known by free cash flow. On the other hand, cash flow can be known as a medium to find net cash inflow that is known from the basic business activities like investing, operating, and lastly financing. In both cases, the net over amount after spending on expenses is considered. In the case of free cash flow, it helps in giving a business a specific amount that is required by an investor as the expenses include changes that took place in net working capital and expenditure of capital.
13. What are the factors that need to be analyzed by a basic financial analyst?
Answer: the factors that are analyzed are depending on the metrics and business type but the most common factors are as listed below:
A financial analyst will check the risk exposure and if there is any risk then how will that risk affect a company’s working capital currently?
It is quite important to check the process of streamlining the requirements and how to make processes efficient in a business.
Based on the revenue and capital of a company the right opportunities need to be identified.
Checking which decisions taken by the company can affect their stock price?
14. When it is necessary to capitalize and not expend in the purchase?
Answer: when the purchase will be capitalized then the purchase will be converted and known as an asset of the company written on the balance sheet. When the purchase is not done and capitalization is done at that time the company can get the great profit that will be noted and reported by the shareholders. An expense that is capitalized is more beneficial to the company as it will gain new assets with lifespan long term and can depreciate costs.
15. Can you explain the three types of financial analysis with their names?
Answer: liquidity analysis is prolonged to many types. The liquidity analysis uses the company’s balance sheet to know whether the company can meet the needs of short-term obligations. This is performed through the use of different methods and they include:
A current ratio will be known by dividing the current assets by current liability
Net Working capital
Then we have leverage analysis that is used to evaluate the business performance of a company. The process of leverage analysis is commonly done using debt/ equity ratio and DuPont analysis model etc.
Vertical analysis is known as a method to check the different components of a company’s income statement. Here the parts are divided by the revenue of a business. For a better result, the enterprise should compare with other companies in the same or related industry.
With the help of the above tips, course mentioned, and financial analyst interview questions, a person can crack their interview. But mainly while attending the interview, a person should have confidence in them. Without faith, a person cannot even say their name in front of the employee. A person should be confident and learn about the company and the career to answer financial analyst interview questions quickly and correctly. With basic questions and financial analyst interview questions, everything is mentioned in the article that can help an applicant in many ways.