Choosing a career in finance can be rewarding for individuals with a strategic mindset and a love for numbers. The Indian financial sector is set to rise until the year 2032 with an estimated 911,400 jobs in finance! Moreover, by 2026, the global financial services industry is expected to earn and settle at approximately US$ 33,313.5 billion! These numbers guarantee that jobs in finance will rise exponentially in the near future.
Here is a list of a few more compelling reasons that validate pursuing jobs in finance can be a good option:
- Dynamic industry
- Higher growth potential
- Fast-paced environment
- Multiple career paths
- Stability and a handsome salary
- Upskilling and diversification
Most Asked Finance Interview Questions And Answers
The finance industry is both exciting and challenging not only for fresh graduates but also for seasoned professionals. As you prepare for jobs in finance, it would be crucial to practice some most asked finance interview questions and answers that will help you navigate the interview process smoothly. Here is a comprehensive guide of interview questions and answers for finance for both freshers and experienced folks. This guide will present you as a competent guide in the realm of finance interviews.
Part 1: For Freshers (Beginner-Level)
Q.1: Briefly explain the three financial statements.
A: The balance sheet outlines a company’s shareholders’ equity, assets, and liabilities. The income statement shows the company’s net income, revenues, and expenses. The cash flow statement displays cash outflows and inflows from three major areas: financing activities, investing activities, and operating activities.
Q.2: What does ‘working capital’ mean?
A: The total amount left after deducting current liabilities from current assets is the working capital. It depicts the cash tied up in the business through receivables and inventories and the cash amount you need to pay in the next 12 months as the business’s short-term obligations.
Q.3: Can I show positive cash flows if my organisation is facing financial problems?
A: Yes, it is possible! You can show impractical enhancements in the working capital. You can show selling inventories, delaying payables, or not letting revenue move in the pipeline.
Q.4: What is a secondary market?
A: Also known as aftermarket, a secondary market is a place to trade securities. These securities are offered to the public beforehand in the primary market and are already listed on the stock exchange. Some examples include the New York Stock Exchange (NYSE), the Bombay Stock Exchange (BSE), and the NASDAQ.
Q.5: When do you capitalise any purchase and not an expense in accounts?
A: As per the company’s accounting policies, if the purchase is expected to be used in the business for over a year, it is capitalised and depreciated.
Q.6: When do two companies merge? Which factors drive mergers and acquisitions?
A: Among the several reasons behind mergers and acquisitions a few of them are want to chase synergies (cost savings), enter, and capture new markets, and eliminate a competitor. You can state some social reasons while answering this interview questions for finance. These include empire-building, ego, or even justifying higher executive compensation.
Part 2: For Experienced Professionals (Advanced Level)
Q.1: Imagine you are the CFO of a giant company, what would not let you sleep at night?
A: This is amongst the most asked finance interview questions and answers. To answer this, gear up to give an outline or synopsis of the company’s current financial position. Highlight the common financial statements:
- Income statement: margins, growth rates, and profitability.
- Non-financial statement: conditions in the capital markets, company culture, and government regulation.
- Cash flow statement: the need to raise cash, long-term and short-term cash flow profile, or return capital to shareholders.
- Balance sheet: capital assets, liquidity, credit metrics, leverage, liquidity ratios, return on equity (ROE) and return on assets (ROA).
Q.2: Why is Property, Plant & Equipment (PP&E) important and how do you record it?
A: We must focus on four areas when accounting for PP&E on the balance sheet: initial purchase, depreciation, capital expenditures (additions), and dispositions. Revaluation is another major aspect that needs to be considered. For several organisations, PPE remains the main capital asset that generates cash flow, profitability, and revenue.
Q.3: If I want to gauge the overall health of my organisation, which statement would I refer to and why?
A: Cash in the ultimate answer! Ironically, the statement of cash flows receives the least attention. But it is this very statement that will show you how much cash or total amount your company is generating.
Note: You can pick a different answer altogether for this question but remember to provide a good justification, for instance, the income statement as it highlights the profitability of a company and its earning power. Or the balance sheet as assets drives cash flow!).
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Conclusion
As you prepare for most asked finance interview questions and answers, remember that recruiters are looking for individuals with a perfect mix of theoretical, and practical knowledge, and soft skills. Also, irrespective of your years of experience, you will need thorough preparation of interview questions and answers for finance and the ability to effectively articulate your skills and experiences.
Good luck!
Check our website Rozgar.com to find the best jobs in finance.
Frequently Asked Questions
To answer this question, you can highlight your love for math or numbers, your analytical skills, and also your interest in economic news and trends. Quickly put your soft skills and abilities on display! Emphasize that your academic background or certain years of experience have equipped you with all the requirements and necessary knowledge or skills that will be meaningful in the finance industry.
If you forget an answer, stay calm. Take a moment to think about a question, if you can still not recollect an answer, ask the interviewers to simplify the question and explain it again. By this time if you fail to remember the answer, there is no harm in sharing the same! Let them know you attempted it, but you cannot recall it! This should not cause much harm.
Emphasize your unique experiences, skills, and likeness to the financial field. Summarise how you can contribute to the organisation's success with your strong work ethic and fresh perspective towards work.
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