RBC Capital Markets LLC Mock Interview
Practice 27 RBC Capital Markets interview questions covering deals, markets, and technical expertise.
Question 21 of 27
If you noticed that a company's balance sheet was showing increased amounts of accounts receivables, what future impacts to that company would you consider to be feasible?
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Ryan Brunner has over ten years of experience recruiting, interviewing, and hiring candidates in the healthcare, public service, and private manufacturing/distribution industries.
At the root of this question, your interview will be looking to hear that you understand how the different lines on a company's balance sheet are related to each other. In your answer, be sure to point out your understanding of this as your job as an analyst with RBC Capital Markets will rely on your ability to do so.
Ryan Brunner has over ten years of experience recruiting, interviewing, and hiring candidates in the healthcare, public service, and private manufacturing/distribution industries.
"An organization's lines on a balance sheet all have impact on other lines. In the case that I was made aware of an increase in accounts receivable for an organization, I would note that cash flow could be directly impacted and give a higher chance that the organization didn't have enough money to operate. As well, the reduced value of assets is a real possibility for that organization."
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Assuming that there is no offset in current liabilities, increased accounts receivables would result in lower free cash flows and a lower valuation. Depending on how much cash is being tied up in accounts receivables, the company may also have trouble making interest payments as they become due.
Marcie's Feedback
Hmm. Are you mixing up accounts receivables with accounts payable here? If a company's balance sheet was showing an increase in accounts receivable, it would indicate more cash flow, not less. Be sure to brush up on the meanings of technical terms so you don't get tripped up during the interview.
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