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Fin Model Qns - 80

The document contains a comprehensive list of 80 financial modeling interview questions categorized into sections on income statements, balance sheets, cash flow statements, financial ratios, Excel formulas, and key terminologies. Each section includes questions that assess various aspects of financial modeling, such as revenue estimation, cash flow analysis, and the use of Excel for financial modeling tasks. This resource is aimed at helping candidates prepare for financial modeling interviews by covering essential concepts and practical applications.

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3 views6 pages

Fin Model Qns - 80

The document contains a comprehensive list of 80 financial modeling interview questions categorized into sections on income statements, balance sheets, cash flow statements, financial ratios, Excel formulas, and key terminologies. Each section includes questions that assess various aspects of financial modeling, such as revenue estimation, cash flow analysis, and the use of Excel for financial modeling tasks. This resource is aimed at helping candidates prepare for financial modeling interviews by covering essential concepts and practical applications.

Uploaded by

joshinsebastian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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80 Financial Modeling Interview Questions

Income Statement Interview Questions


1. How would you estimate revenue for the next few years?
2. Pick an industry of your choice and explain the levers you would consider.
3. How will you determine those revenue growth rates?
4. How would you build different scenarios for revenue?
5. Would you assess different risks associated with different scenarios? How would you
incorporate those in your model?
6. For how many years would you project revenue? Is a five-year timeline sufficient?
7. Which reports would you consider for revenue projection? Where can you find those
reports?
8. How would you project COGS?
9. Is COGS relevant for every industry?
10. How do you calculate gross margin? Would you assume it to be constant, increasing,
or decreasing, and why?
11. Can increasing gross margins attract more competition? Would you factor that
competition into your revenue estimates?
12. What is SG&A? What kind of expenditure is included in it?
13. How does scale impact SG&A margins?
14. Is depreciation a part of SG&A?
15. How would you estimate depreciation?
16. How is depreciation different from other expenses?
17. What is the role of capex in projecting depreciation?
18. What is a non-recurring expense? How do you model it?
19. How would you project interest expense? What is the starting point?
20. Would principal payments impact the income statement?
21. Why is interest expense the last thing calculated in the model?
22. How would you determine the interest rate?
23. What is LIBOR?
24. Which tax rate would you choose and why?
25. What is terminal value? How would you calculate it?
26. What is a terminal multiple?
27. For benchmarking, how would you identify a peer set? Which levers would you
benchmark?

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80 Financial Modeling Interview Questions

Balance Sheet Interview Questions


28. What are cash and cash equivalents (CCE)?
29. What is the difference between CCE and marketable securities?
30. How do you estimate cash & cash equivalents?
31. What is operating cash? Is it the same as CCE?
32. How would you project inventory?
33. Is inventory relevant for every industry?
34. How would you project accounts receivable and accounts payable? How does
scale impact these two?
35. What is operating working capital (OWC)?
36. Why would some companies within the same industry have negative OWC while
others have positive OWC?
37. Why is negative OWC preferred?
38. How would you project Plant Property & Equipment (PPE)? What are the key levers
to consider?
39. How does PPE impact cost and revenue estimates?
40. How would you fund the projected capex? Which levers should you consider to
determine the optimal sources of funds?
41. How would you calculate the maximum debt level?
42. Considering the pros and cons of debt versus equity financing, what factors would
you weigh to determine the best approach for raising capital?
43. How do you prepare a debt payment schedule? How does it impact the firm’s credit
rating?
44. Which line items of the Income Statement have a direct impact on the Balance
Sheet? Which ones have an indirect impact?
45. How does dividend payment affect the Income Statement, Balance Sheet, and Cash
Flow Statement?
46. What is a circular reference?
47. Provide examples of circular references in financial modeling.
48. What is excess cash? How do you calculate it?
49. What is a revolver? How do you calculate the revolver amount?

Cash Flow Statement Interview Questions


50. What is the objective of creating a Cash Flow Statement (CFS)?
51. What are the three key line items of the CFS?
52. How is the CFS different from the cash account?
53. What are the two most common methods to calculate cash generated from
operating activities (CFO)?

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80 Financial Modeling Interview Questions

54. Why does an increase in current assets have a negative impact on CFO while an
increase in current liabilities has a positive impact?
55. Is it possible for a company to generate consistent profits year after year but
struggle to pay employee salaries and meet other operating expenses? How would
you identify the issue by looking at the CFS?

Financial Ratios Interview Questions


56. What are the key liquidity ratios?

57. Is lower the better in case of liquidity ratios? How does this differ for asset-heavy
versus asset-light industries?
58. What are the key asset management ratio?

59. What are the key industry-specific nuances in asset management ratios? How
would these ratios differ for a manufacturer versus a retailer within the same
industry?
60. How does a high inventory turnover ratio impact return on equity and return on total
assets?

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80 Financial Modeling Interview Questions

61. What is the key debt management ratio?

62. Would you prefer a high ROE or a high net income margin?
63. If a company wants to improve its ROA, what strategic decisions can it make based
on an analysis of its current financial ratios?
64. How can financial ratios be used to assess a company’s risk profile for potential
investors or lenders?
65. Can financial ratios be used to predict future performance or upcoming trends for
a company or industry?

Excel Formulas Interview Questions


66. Beyond basic scenario analysis, explain how you would use two-variable data
tables to analyze the combined impact of changes in two variables on a financial
model’s output.
67. Given a financial model with multiple variables, explain how you would use Goal
Seek to find the input value needed to achieve a desired outcome.
68. Describe a scenario where you would use Solver in Excel to optimize a financial
model.
69. How would you use VLOOKUP or INDEX/MATCH to find specific data points based on
certain criteria?
70. Explain the advantages and disadvantages of VLOOKUP, INDEX, and MATCH.
71. How would you handle missing data points or inconsistencies in a dataset before
using it for financial modeling?
72. You need to summarize complex financial data. How would you use data pivots and
charts in Excel to create informative visuals for presentations or reports?
73. How would you ensure your financial model is free of errors?

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80 Financial Modeling Interview Questions

74. Beyond learning and reciting the formulas, be prepared to discuss how you
approach building efficient and well-structured financial models in Excel.

Key Terminologies for Financial Modeling


Interview Questions
75. What is NPV? What is XNPV?
76. What is IRR? What is XIRR?
77. What are mid-year adjustments?
78. What is FCF to firm (FCFF)?
79. What is FCF to equity (FCFE)?
80. How do you derive FCFE from FCFF?

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