MockQuestions MockQuestions
Interviews Questions by Career
Interviews Questions by Company
Interviews Questions by Topic
Get Started
Interview Coach 1:1
Gain the confidence you need by asking our professionals any interview scenario, question, or answer you are unsure about.
Let Us Review Your Answers
Our interviewing professionals will gladly review and revise any answer you send us. Allowing you to craft perfect responses for your next job interview.
Interview Questions by Topic
Interview Questions by Career
Interview Questions by Company

Finance

32 Interview Questions & Answers

1.
If you were the CFO, what would keep you up at night?
Click to View Answers
This is one of the standard finance interview questions and can be given at any finance job level. Step back and give a high level overview of the company's current financial position. Highlight something on each of the three financial statements. Income statement: growth, margins, profitability. Balance sheet: liquidity, capital assets, and credit metrics. Can flow statement: short term and long term cash flow projection, and need to raise money or return capital.
1.
If you were the CFO, what would keep you up at night?
This is one of the standard finance interview questions and can be given at any finance job level. Step back and give a high level overview of the company's current financial position. Highlight something on each of the three financial statements. Income statement: growth, margins, profitability. Balance sheet: liquidity, capital assets, and credit metrics. Can flow statement: short term and long term cash flow projection, and need to raise money or return capital.
Bobbi's Answer #1
"The cash flow and running out of cash would be my biggest fear. The income and balance sheet are resources and tools that are just as important, but running out cash would simply bankrupt the company."
Bobbi's Answer #2
"Running out of cash would be my biggest nightmare. Many companies have a yearly cash forecast built up by month, but also supplement it with a 13 week cash flow projection. Some of the things they're doing to help them manage cash are: expanding lines of credit and other debt facilities and managing accounts receivable and accounts payable days outstanding in order to speed up the cash flow cycle. Additionally, many with companies in the start up and growth stages are always working on their next round of funding to insure the company won't run out of money.

Secondly, ensuring the right financial people are hired and retaining them Finding good people is always difficult and networking with peers seems to be the best way to find good people in financial circles. Retaining good people requires proper training and a good CFO should be giving adequate time to this."
2.
If you could pick one stock, which would it be and why?
Even if you don't have a preferred stock, you've likely discussed various stocks and their performance during economics classes or at a previous internship. In order to make sure that you give a comprehensive answer, pick a stock that reflects something about you. For example, if you have high-risk tolerance, mention this and explain why it's a key factor in your decision-making process.
Bobbi's Answer
"I'm interested in growth because I'm young and my risk tolerance is higher. Companies that pay dividends don't appeal to me because I don't need the recurring income, as I have a job to pay my bills. I would rather see companies use that money to fuel their growth in the short and long term. If we're looking at today, with all the uncertainty abroad, I would want to stick to a US-based stock, and I feel that with it being an election year, it has brought volatility into the market for opportunistic investments at specific times. I'm specifically interested in tech, and Netflix recently reported their earnings. They beat estimates on revenue and earnings, but missed widely on new subscriber growth, sending the stock down 16%. I think this signals a great buying opportunity, as Netflix still has a large market to capture abroad, and these headwinds are a short-term issue. Overall, long-term I feel the company is well positioned to significantly increase their growth and market share abroad. In conclusion, I wouldn't want a single stock to be more than 3-5% of my overall portfolio, as it is not advisable to over-invest in one specific equity, no matter how bullish I might be.

One key thing to remember is that there is no set response when it comes to determining which stock to invest in. What is important is picking a stock that you can stand behind and convincingly talking about the factors that influenced your decision. This is likely to impress the interviewer and get you one step closer to landing your dream job."
3.
What is deferred tax liability and what is its purpose?
On a balance sheet, a tax that a company will owe on its income, but that has not yet been assessed. Because of differences between tax regulations and the GAAP, income may be recognized on a balance sheet for accounting purposes, but not for tax purposes. However, that income will eventually be recognized for tax purposes and income tax will then be assessed. This tax is called deferred income tax, and is recorded as a liability on the balance sheet.
Bobbi's Answer #1
"A deferred tax liability is a tax that is assessed or is due for the current period but has not yet been paid. The deferral comes from the difference in timing between when the tax is accrued and when the tax is paid. A deferred tax liability records the fact the company will, in the future, pay more income tax because of a transaction that took place during the current period, such as an installment sale receivable."
Bobbi's Answer #2
"Deferred Tax Liability (DTL) is reported on a firm's balance sheet and represents the net difference between the taxes that are paid in the current accounting period and the taxes that will be paid in the next accounting period. The liability occurs when the accounting income is greater than the taxable income.

For an example, a company is allowed to defer taxes on a percentage of its income and report this amount as a DTL on its balance sheet. When the tax is due, there will be an equal amount reduction in the DTL item and the cash and cash equivalents account on the balance sheet. In other words the DTL means an accrued tax on the books because book expenses did not match tax deductions for a particular year."
4.
What is the difference between cash base accounting and accrual accounting?
Give a brief definition in your own words of cash base accounting and accrual accounting.
For Cash basis accounting, revenue is recorded when cash is received from customers, and expenses are recorded when cash is paid to suppliers and employees. For Accrual basis, revenue is recorded when earned and expenses are recorded when consumed. The timing difference between the two methods occurs because revenue recognition is delayed under the cash basis until customer payments arrive at the company. Similarly, the recognition of expenses under the cash basis can be delayed until such time as a supplier invoice is paid.
Bobbi's Answer #1
"Cash based accounting recognizes sales and expenses when cash actually flows out of the company. Accrual based accounting recognizes revenues and expenses as they are incurred regardless of cash flows. Accrual based accounting is the more popular method."
Bobbi's Answer #2
"I have only worked at companies that have used accrual accounting, meaning all revenue and expenses are recorded when they are incurred. Cash based accounting is recorded when the cash flows in and out of the business. An example of cash based and accrual accounting on the revenue side is: A company sells $10,000 of green widgets to a customer in March, which pays the invoice in April. Under the cash basis, the seller recognizes the sale in April, when the cash is received. Under the accrual basis, the seller recognizes the sale in March, when it issues the invoice.

An example of cash based and accrual accounting on the expense side is: A company buys $500 of office supplies in May, which it pays for in June. Under the cash basis, the buyer recognizes the purchase in June, when it pays the bill. Under the accrual basis, the buyer recognizes the purchase in May, when it receives the supplier's invoice.

The cash basis is only available for use if a company has no more than $5 million of sales per year (as per the IRS). It is easiest to account for transactions using the cash basis, since no complex accounting transactions such as accruals and deferrals are needed. Given its ease of use, the cash basis is widely used in small businesses. However, the relatively random timing of cash receipts and expenditures means that reported results can vary between unusually high and low profits."
5.
Explain to me what Beta is in your own words? Why is it so important?
Give the definition of Beta in your own words:

1. The beta of a company measures how the company's equity market value changes with the change of market overall. It is used in the Capital Asset Pricing Model (CAPM) to estimate the return of an asset.

2. Beta is an expression of how volatile an investment is compared to the overall market.
Bobbi's Answer #1
"Beta is a measure of the volatility of an investment compared with the market as a whole. The market has a beta of 1, while investments that are more volatile then the market have a bet greater then 1 and those that are less volatile have a beta less then 1."
Bobbi's Answer #2
"Beta is an expression of how volatile an investment is compared to the overall market. A beta of 1 indicates that the investment will move with the market. A beta of less than 1 means that the investment will be less volatile than the market. For example, if a stock's beta is 1.3, then theoretically it's 30% more volatile than the broad market. Beta can help investors choose investments that match their specific risk preferences. A risk-averse investor, for example, may want to avoid overweighting their portfolio with high-beta stocks to avoid excessive volatility."
View All 32 Finance Questions and Answers
Sign up to access our library of 50,000+ Q&As,
plus coaches for one-on-one support, so you can interview more confidently.
More Interview Q&As
Explore expert tips and resources to be more confident in your next interview.
Behavioral
Common
Phone
Tough
Leadership
All Interview Topics
All Career Q&As
About Our Interview Q&As
Our interview questions and answers are created by experienced recruiters and interviewers. These questions and answers do not represent any organization, school, or company on our site. We do not claim they will be asked in any interview you may have. Our goal is to create interview questions and answers that will best prepare you for your interview, and that means we do not want you to memorize our answers. You must create your own answers, and be prepared for any interview question in any interview.