Finance careers are very lucrative as most financial professionals take larger paychecks than other people. The salary scale and specific job rate can vary depending on experience and specialization. A career in finance is highly rewarding, according to leading media outlets like Forbes and Business Insider.
The finance industry is full of opportunities but to reap the benefits of the industry you will need to work hard to get a job. Landing an interview is the first step to building a successful career. Whether you are a fresh graduate or have been part of the job market for some years, you will have to go through a stressful stage of a job interview. Properly answering the questions is crucial for landing a job.
What can you expect in a finance interview?
Finance interview, like most of the other roles, covers technical, general, and behavioral questions. You must have a confident and well-thought answer to all the questions. Incomplete, long-winded, inappropriate, and unclear answers are not going to impress hiring managers.
The key to success is preparing for the interview. Never go into one without doing your homework. Review the resume and rehearse your answers, so you can articulate the core values you can offer to a company. Make sure you know about the corporate culture, preferred financial tools, and accounting practices of the company.
General Finance Interview questions:
Why are you interested in finance?
The question gives the interviewer a chance to check whether you are truly interested in finances or not. If it is part of your professional DNA then you are likely to achieve a high level of performance at the job. Finance is a highly competitive industry and recruiters are looking for candidates that are passionate about their job.
The perfect answer to the questions includes a walk through of the resume and a showcase of your career path that led to domain mastery. Showcase your personal experiences and motivations that drew you towards a career in finance. Do not forget to showcase your financial knowledge and why you are interested in finance while answering finance interview questions.
What makes you a good hire?
The question offers an opportunity to brag about your knowledge and experience. Recruiters prefer candidates that value dedication to the organization. Hiring managers do not like employees that are not ready to give their all to the job.
Make sure that the answer mentions the contributions you have made in your previous jobs. If it is your first job then highlight your skills and ways you can use them to contribute to the goals of the company. Share your professional goals and describe ways they are connected to the culture and mission statement of the company.
Sharing a project that you have done in your previous job that is compatible with the company goals is a smart move. It shows that you are a good fit for the position. If you have any awards or recognitions make sure you share as they are proof of your capability as a financer. Putting a light on the personality traits will also set you apart from the other candidates.
What are your career aspirations for the next five years?
The question is for assessing if the candidate’s career path fits the position they are interviewing for. If there is a conflict between company goals and the candidate’s plans, then they are not a good hire. Finance is not an easy career path as it is a strategic domain, and lack of planning can lead to serious disasters.
It is better to avoid mentioning any ideas for starting your business. Some employees may value entrepreneurship and look for entrepreneur traits, but it can also be perceived negatively.
Behavioral Finance Interview Questions:
What were the three headlines you remember reading on CNBC or WSJ or Bloomberg this year?
Professional excellence comes with industry knowledge. Staying up-to-date on the finance news sets you apart from other candidates. To become a leader it is essential to be familiar with emerging trends, regulations, and corporate movements. They should be able to detect opportunities and risks that allow them to make proactive decisions. To elevate to leadership roles it is vital to be aware of what is happening in the industry.
It is crucial to be aware of the following things:
- Federal, international and local policies that impact the organization
- The latest innovation, technologies, and tools that are changing the finance industry
- Corporate scandals that have caused market disruptions, acquisitions, new players, IPOs, mergers, and changes in demand and supply
Being informed increases the chances of getting hired.
Share the best way to approach a budget.
It is a subject question, and the best way to respond is to base the arguments on solid accounting and financial principles. Make sure you shine a light on the importance of collaboration between departments while planning the budget. Collaboration makes sure there is alignment between the strategic goals and budget of the company.
The answer should not make you look like you take too much risk. Innovation and risk aversion do not mostly go hand-in-hand, but finance leaders like an unfettered approach to financial management. You should push for a transparent budget calendar that the entire organization can follow and easily accessible.
What would be your priorities as a Chief Financial Officer (CFO)?
It is an essential part of a finance interview questions as it allows digging deeper into the value systems, decision-making skills, and leadership style. You can use the mission statement and strategic goals of the company as a reference point and link it with the three key financial statements. Share how you balance your sheet, make an income statement, and handle the cash flow. Mentioning the things you are willing to sacrifice so that you can help the company its financial goals.
In what order do personal accomplishment; praise, and financial advancement motivate you?
The question seems easy and people tend to answer it with opinionated responses, but it is not the ideal answer. It is a trick question, and if not answered properly, it can be a deal-breaker. The answer reveals the motivational hierarchy and core values of the applicants.
The ideal order of things is:
- Personal accomplishments
- Financial advancements
It is not a wise decision to give the impression that money is more important than overarching motivation. Prioritizing accomplishments is always a smart move for making a good impression on the hiring manager. Mentioning that your motivations are driven by positive results, good work, and excellence increases your chances of getting hired. Interviewees prefer candidates that are motivated by a strong work ethic. Praise should be the last thing on your list. Satisfaction and personal pride must be the core attribute.
Have you entertained the idea of becoming an entrepreneur?
It is important to be prepared for the question. Make sure that the answer is resourceful, creative, results-oriented, and innovative. These are valuable traits for a career in finance. In a job interview, it is essential to mention you have the characteristics to become a valuable part of an organization.
By claiming you have entrepreneurial characteristics and are looking to set up a company, it may show you have an unclear path in the company. They might not be interested in investing in such a candidate.
If you have experience in running a business then you can mention that you have experience apart from working as a part of the team and corporate environment. Shine a light on you do miss specialized functions of the profession in the finance industry.
Technical Finance Interview Questions:
Can you define working capital?
The usual definition of working capital is current assets less current liabilities. It shows the amount of cash that can be converted into items like receivables and inventories. It tells how much is required to settle short-term obligations of the year.
What is meant by EBITDA?
EBITDA stands for Earnings before interest, depreciation, taxes, and amortization. It shows the profits of the company by defining total expenses and revenue, before computing the deductions like interest expense and taxes.
How can you make a 10% equity increase and impact the income statement?
It is a trick question that must be answered carefully. The equity increase is itemized in the cash flow and the balance sheet is not mentioned in the income statement. The net income computed at the bottom of the income statement is reflected in the returned earnings under the heading of equity on the Balance sheet.
Differentiate and cite three key types of financial statements.
The three major financial statements are:
The income statement:
It is a document that mentions items that make up the expenses and revenue of the company. It serves as the main indicator for the profitability of the organization.
The balance sheet:
The document showcases the assets and liabilities of the company along with the equity of shareholders.
The cash flow statement:
It is a document that records the amount of money that is moving through investing, financing, and operating activities of the company.
The net income from the income statements is reflected in the statement of cash flow as net income. The balance sheet is mentioned as retained earnings.
Which statements are best for assessing the financial state of an organization?
Rooting for the cash flow statement is the safest answer. The statement showcases how much money the company is earning and spending. It can be a quick reference for ascertaining the liquidity of the business.
The income statement only shows profitability, and a balance sheet tells just the liabilities and assets. They lack the metrics to fully evaluate the performance of a company.
Can a company go bankrupt even if it has a positive cash flow or positive net income?
Yes, a business can go under even if it shows positive results. Positive results do not matter if they are fraudulent accounting practices. The positive profits may reflect the real figures, but they ignore the possibility of accounts receivables to unrealistic levels or dilution of working capital because of the settling of large payable accounts then finances are in trouble.
Positive cash flow is generally an indication of a healthy business, but there are some other crucial factors as well, like selling inventories, diminishing profitability, and extending payables. These things are not reflected in the snapshot, but they show calamitous straits of the company.
What is M&A s driven by?
Companies choose the M&A route for several reasons. Not all the reasons are positive. Some organizations go through acquisitions and mergers to achieve economies of scale, synergies, and cost savings with associated organizations.
Several tech organizations use M&A s to diversify and establish a foothold in the market. It helps them in acquiring companies that are best at specializing in emergent and advanced technologies. Some companies use the M&A route to eliminate competitors and achieve better footing in the market.
Finance is a competitive and rewarding industry. Many financial advisors, managers, and analysts enjoy excellent salaries, but making big in such a competitive industry is not easy. People interviewing for finance jobs should make sure their applications exudes value and they are prepared for finance interview questions. A candidate should use the interview to share the positive contributions they can make to the business. Make sure you refresh your industry knowledge and bring a lot of value to the table.