Competition has been increasing rapidly during all these years. Job seekers are many and the number of opportunities available is lesser in comparison. Financial analyst interview questions discussed in the blog can help you to hit the bull’s eye. But we understand how stressful interviewing for a job can be. To be confident and get your mind focused, you need to prepare well. You should be ready in all the aspects of appearing in a job interview. As we all know that financial analysis is a wide area; finding the most important topics is challenging.
There are several roles that a financial analyst plays in a company. When you would be hired to this designation, you will be doing the following:
Here in this article, we will be listing frequently asked Financial Analyst Interview Questions and Answers with the belief that they will be helpful for you to gain higher marks. Also, to let you know that this article has been written under the guidance of industry professionals and covered all the current competencies.
I have always loved playing with numbers and doing calculations. My interest in managing finances has motivated me to take the subject as a major in my graduation. I want to follow this career path for the long term. Moreover, I believe companies are very concerned about the financial analysis thing. I want to be a part of the process of how companies make themselves highly profitable. I always used to read about business leaders and biographies of entrepreneurs.
The steps to prepare a cash flow statement are:
Yes, I do follow the stock market every day. I am very interested in banking sector stocks. Also, I have invested a part of my savings in the stock market.
I think out of many metrics, the best one can be Price-To-Earnings Ration (P/E) Ratio. It shows the relation of the stock price of the company to its earnings. It is considered best to evaluate the financial service firms.
It is the capital that is required by the company to finance its current assets. Working capital represents the funds to finance regular operations that include day-to-day businesses. Working capital makes it easy to gauge the company’s operating liquidity.
Journal | Ledger |
---|---|
It is the first entry of financial transaction summarized and recorded according to the double-entry system | A ledger is recorded from the journal in the format of a ‘T.” In addition to that, a ledger is the source of the income statement, trial balance, and balance sheet. |
If the journal is made correctly, then the only perfection can be added into the ledger | It is dependent on journal |
Date, ledger folio, particulars, credit amount, and debit amount | T format journal includes particulars, date and amount on both sides |
Called “book of original entry” | Called ‘book of second entry; |
Net present value is the idea of helping companies to engage in transactions or invest in projects having positive Net Present Value. It helps managers and investors to not invest in projects with a negative Net Present Value. This rule is seen in accounts for Time Value of Money, capital budgeting projects. If the NPV of the project is positive then the company should move forward with the idea of investing in that project.
Taking a loan becomes a very challenging process if the important aspects are not covered properly. The main factors which I believe should be considered before taking a loan are
1. Liquidity: the amount of cash as well as the cash that is easily convertible to cash assets owned by a company. Liquidity is first considered for the short-term and then for the long-term.
2. Solvency: The company can meet its obligations continuously.
3. Operating Efficiency: It is the best source of its financial success and operating margin is used to indicate the efficiency.
4. Profitability: In evaluating a company, liquidity, operating efficiency, and basic solvency can perform better. Net margin is a good metric for the evaluation of profitability.