Important Finance Interview Questions & Answers

The finance industry is divided into many different departments, each of which specializes in a different area. People who join these departments may have different reasons for doing so. For example, some people join the finance department to work in the accounting department while others may choose to work in the finance department of a company.

However, the finance job interview question is one that is asked by all departments. This blog discusses some of the common questions asked in these interviews.

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Finance Interview Questions for beginner-level

Given below are some questions and answers for a finance interview for the beginner level.

1. What motivates you in your job?

This question is one of the fundamental questions asked in a finance interview. In addition, This question examines whether the student will fit in with the company and the job opportunities. Build your inspiration towards what the finance job has to offer you.

In addition, the main motivation in your job is to meet goals, meet deadlines, and learn new things. Although coming up with creative ideas to make some things better.

2. What is working capital?

Working capital is the amount. Additionally, the use of this amount by the company in its day-to-day trading operations. In addition, it is a measure of the efficiency of the company's liquidity or short-term financial health.

The calculation of Working capital by deducting current liabilities from the current asset, as listed on the company’s balance sheet. Moreover, Current assets include stock inventory, cash, cash equivalent, marketable securities, and account receivable. Current liabilities include short-term debt, dividends, accounts payable, etc.

3. What is a cash flow statement?

A cash flow statement is the most crucial tool. The use of this tool to manage finance by tracking the cash flow of an organization. This statement is one of the balance sheet and income statements that helps in determining the performance of the company.

As well, it also displays the source of cash and helps you observe outgoing and incoming money.

4. Explain preference capital?

Preference capital is that part of the capital raised by way of shares of preference capital. In other words, it is a hybrid form of financing, in which there are characteristics of Debenture and also characteristics of Equity.

5. Can a company appear positive cash flow while facing financial problems?

Yes, the company appears positive cash flows while facing financial problems. Furthermore, positive cash flows are an indication that the cash balance of an entity has increased from its previous year.

Finance interview questions for Intimidated-level

Here are some questions and answers for a finance interview at the intermediate level.

1. Explain the fair value?

The fair value is usually based on the most recent pricing and quotation of an asset. For instance, during the last 4 months, the share price in the company was $30, but it fell to $30 during the recent revaluation, so the fair value would be $30.

2. What do you mean by RAROC?

The RAROC full name is the risk-adjusted return on capital which is a modified return on investment that takes into account the elements of risk. Additionally, it is the rate of return measure ordinarily utilized in financial analysis, where multiple endeavors, projects, and investments are evaluated based on capital at risk.

3. Explain the difference between costing and cost accounting?

Costing means practicing the cost of any product, service, or activity at multiple times and stages of production. It is not used for decision-making.

On the other hand, cost accounting is the process of accounting that classifies, allocates, records, summarizes, and controls the cost of any product, service, process, or activity. The use for decision-making.

4. How do I calculate the WACC?

The weighted average cost of capital means the average cost to attract investors, whether they are stockholders or bondholders.

The calculation of WACC is multiplying the cost of each equity and debt (capital source) by its appropriate weight by market value and then adding the products together to determine the total.

Finance interview questions for Advanced-level

Given below are some questions and answers for a finance interview at an advanced level.

1. What is meant by Put Option?

Put option refers to an option where you have the right to sell the stock at a specific price at a specific time. For this right, they put buyers to pay the seller a sum of money, which terms as a premium.

2. What do you mean by Goodwill?

Goodwill is a tangible asset. One company buys it from another company. It contains the excess of the purchase price over the fair market value of an acquired business.

3. What is the difference between a journal and a ledger?

Journal is a subsidiary book of accounts. Transaction records keep in this book. On the other hand, Ledger is a principal book of accounts. It contains transaction classifications and is also recorded in the journal.

Conclusion ( Finance Interview Questions )

This blog has provided you with the questions and answers asked at the time of the finance interview. We have asked these questions at three-level, beginner level, intermediate level, and advanced level.

However, the above finance interview questions given will surely help you in clearing the finance interview. Additionally, this blog has separate questions for Beginner, Intermediate and Advanced levels.

If you want to be successful in a finance interview then make sure to get masters in the above-given questions. This blog is very good for cracking finance interviews to get success.

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