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What are the Interview Questions for Financial Analysts?

Are you preparing for the financial planning and analysis (FP&A) job role? You should know the possible financial planning and analysis interview questions about the industry, financial planning and analysis (FP&A) trends, and basic and important concepts. Therefore, prepare for the financial planning and analysis interview questions and present yourself professionally in front of the hiring manager.

Based on our extensive research on financial planning and analysis (FP&A), we have clubbed financial planning and analysis interview questions. We have also written some questions that experts and trainers believe can be asked to financial planning and analysis professionals. 

Let's take a look at some of the most relevant interview questions that you should prepare for before you sit in an interview for the financial planning and analysis (FP&A) job role.

What are the three financial statements?

The three financial statements are the balance sheet, cash flow statement and income statement. You can elaborate on it by stating the definitions of all three. A balance sheet shows the assets, liabilities, and shareholder equity of a company. An income statement shows the company's expenses and sales revenue. Finally, the cash flow statement depicts the cash flows generated by operating, investing, and financing activities over time. 

What effect does an inventory write-down have on the three statements?

An inventory write-down affects the balance sheet and the income statement. A write-down is taken as an expense that reduces net income and tax liability. A decrease in net income lessens a company's retained earnings, which reduces shareholder equity on the balance sheet. The asset value of an inventory on the balance sheet must also be reduced to its precise net realisable value (NRV).

Why do you want to be financial planning and analysis (FP&A) professional?

Start with talking about the skills needed for the job. For example, financial planning and analysis (FP&A) professional requires a high level of problem-solving, good data handling and interpreting skills. In addition, you must have a good understanding of financial analysis, modelling, and forecasting. Phrase your answer rotating around these critical skills, and you will be able to impress the hiring manager.

What is the difference between budgeting and forecasting?

Budgeting depicts the expected revenues that a company wants to achieve in the future, whereas financial forecasting estimates the amount of income or revenue generated in the future.

What is EPS and how is it calculated?

EPS stands for Earnings per Share. It is the amount of income generated for each share of the company. The preferred dividends paid are subtracted from the total net income to calculate earnings per share. The earnings would be divided by the balance sheet's total number of outstanding shares.

What do you know about financial modelling?

Financial modelling can be explained as a quantitative analysis tool that helps figure out asset pricing and assists with other general financial analyses. It helps to make future predictions based on the organisation's historical and present financial records. It also helps with a business valuation, budgeting and strategic planning.

What are the main components of a cash flow statement?

A cash flow statement helps us understand the business's cash flow position. It gives detailed information regarding the cash flowing in and out of business. There are three main components of the cash flow statement: cash flow from operating activities, cash flow from investing activities and cash flow from financing activities.

What does it take to be an outstanding financial planning and analysis (FP&A) analyst?

You can discuss the skills required to become the best financial planning and analysis analyst. The three essential qualities of becoming the best financial planning and analysis professional are given here.

  1. Analytic Skills: Collection and organisation of data for analysis. Recommendations also come in this, and here is the chance for financial planning and analysis (FP&A) professionals to shine. 
  2. Art of presentation: Analysis, interpretation and recommendations are not enough. Successful financial planning and analysis (FP&A) professionals should also present the required information well.
  3. Soft Skills: A world-class financial planning and analysis (FP&A) professional should have the best communication skills. This requires confidence while communicating, effectively articulating the thoughts and being able to read the client's mindset. Being politically sound and marketing yourself well are added advantages.

Give us an example where a company has positive cash flow but is not financially sound.

This can be a tricky one. You can state that one such instance could be a company selling off inventory but delaying the amount of payables.

What essential tools do technical analysts use to analyse a company's stock?

While conducting technical analysis, analysts generally use line charts, bar graphs and point charts to assess the performance of a company's stock.

What do you understand by cost accountancy?

Cost accountancy is the application of cost accounting principles and guidelines to calculate the cost of production by identifying the fixed and variable costs associated with manufacturing products. It is a branch of managerial accounting that helps in the decision-making process for the business.

We hope these financial planning and analysis interview questions help you crack the interview. Regular preparations updating your knowledge and reviewing your performance are significant for appearing and getting selected for the financial planning and analyst role (FP&A). For interview prep, you can also check out our blog Tips For Cracking Financial Analyst Interview. All the best.

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