The pasture looks greener for finance-related careers compared to most other occupations. According to official figures, finance professionals take home larger pay checks and can expect a rosier future compared to the national average for all jobs in the U.S. While specific job growth rate and salary scale depend on specialization (examiners, analysts, advisors, managers), a career in finance easily ranks among the most rewarding, according to many leading media channels such as Business Insider and Forbes. This positive trend pervades across borders, given a generally brisk global economy as well as stronger adherence by more countries to International Financial Reporting Standards (IFRS).
Everything sounds well and good but to reap the rewards, you must first land a job. And to do that, you have to clinch a finance interview.
Whether you’re coming fresh from college or have been in the job market for a while, getting hired for a new finance-related role almost always involves a much anticipated but stress-inducing interview. You might have already amassed the skills worthy of Wall Street, but your answers to specific finance interview questions can still block your shot at a dream job.
What to expect during a finance interview
Like the case for most other roles, finance interviews cover general, behavioral, and technical (or field-specific) questions. Always be ready to belt out confident and articulate responses to all three types of questions. Remember that giving incomplete, unclear, inappropriate, long-winded, or incorrect answers can turn off your interviewer and send your application down the drain, especially if there are other competent candidates vying for the same position.
Preparation is the key. Before coming for the interview, make sure that you have done your homework. That means a lot more than just putting on the right wardrobe and wearing the right attitude.
It means reviewing your resume and rehearsing how to articulate the core value you can offer to the hiring company. It also means doing some research on the employer — especially its corporate culture, accounting practices, and preferred financial tools. Visualize how the interview might take place and which questions the interviewer(s) might likely ask. Come to the interview equipped with well-thought out answers to those questions.
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To get you started, here are some common finance interview questions and possible answers that can help you get onboard:
1. Tell me why you’re in finance.
This question allows the interviewer to gauge whether finance truly runs in your professional DNA. If it does, the likelihood that you will achieve acceptable to excellent levels of performance at the job is more or less assured. Otherwise, if you have a different career or craft in mind, then your lack of focus and passion will likely compromise performance. In a highly competitive world, recruiters prefer candidates who are passionate about what they do and can achieve ever higher levels of performance in their field of expertise.
This is where you can give a walkthrough of your resume, showcasing a career track that moves inevitably towards domain mastery. Highlight personal experiences and motivation that attracts you to pursue finance as a profession. Demonstrate your knowledge about the industry and why it excites you.
2. Why should we hire you?
Time to claim your bragging rights (well, you better hope you have some). Recruiters hire candidates who can give value back to the organization in exchange for fair compensation. If a recruiter gets the impression that they’ll get shortchanged for hiring you, they definitely won’t.
So your game plan should include mentions of how you can contribute to the company’s goals and how you are intrinsically motivated to do so. Describe how your professional goals coincide with the company’s culture or its mission statement, and how you can be a productive and proactive stakeholder of that mission. Relate relevant achievements in your field or career (a research paper in college that made a difference in a particular community or your perception about finance, a project in a previous employer that generated demonstrable value for the organization, recognitions or awards that prove you are an excellent finance professional, certificates etc.). Mention personality traits (extreme focus, detail-orientedness, etc.) that have significant impact in your profession.
3. Where do you see yourself in five years?
This question allows the recruiter to assess whether your career plan fits the position you are applying for, and whether your ambition jives well with the succession strategy and staff transitions they are envisioning within the organization.
Perhaps more importantly, it also shows whether you actually have a career plan instead of just letting the current take you where it will. Finance is a highly strategic domain and going out afield without a plan can be disastrous. Imagine a finance professional who has a messy, deficit-driven personal finance profile and you’ll get the idea. So speak like you are providing details of a preexisting and organic plan, instead of sounding like it’s just wishful thinking.
Be cautious of mentioning ideas of setting up your own business. While some employers might value entrepreneurship and actively seek the trait in candidates, others view it as a negative when it comes to their ROI in hiring you. (more on this later).
4. Cite the top three headlines you remember reading in the WSJ or seeing on Bloomberg Channel or CNBC this year.
Industry knowledge is a benchmark of professional excellence. If you are not up-to-date in your field, then you won’t belong to any job applicant shortlist. Finance leaders need to be familiar with emerging market trends, corporate movements, new regulations, and other notable developments in the sector so they can detect risks and opportunities and make smart proactive decisions for their organizations. You won’t get elevated to leadership roles if you confine your career only to whatever task is assigned to you. Your awareness should well extend beyond your cubicle and immediate functions.
(Note: At the very least, a finance pro should be familiar with what WSJ stands for — The Wall Street Journal.)
Keep abreast of the following:
- relevant local, federal, and international policies that affect your organization
- new technologies, tools, and innovation that are changing the way the industry conducts business
- major market disruptions caused by corporate scandals, the entry of new players, mergers or acquisitions, IPOs, and radical changes in supply and demand.
The bottom line: be hired by being informed.
5. What do you think is the best way to approach budget?
This is a subjective question. However, when responding, always base your arguments on sound financial and accounting principles. Mention the importance of interdepartmental collaboration in budget planning and the alignment between the company’s budget and its strategic goals. Always argue for sustainability and resist the urge of appearing too much of a risk taker. Risk aversion and innovation rarely go hand-in-hand but most finance leaders would prefer that to a lax or unfettered financial management approach. Argue for a transparent budget calendar that is universally accessible and followed across the organization.
6. If you were our Chief Financial Officer (CFO), what would be your priorities?
This is a question that probes deeper into your leadership style, value systems, and decision making potential. You can approach the challenge using the company’s mission statement or strategic goals as the reference point and linking that with the three main financial statements. How would you make the income statement, balance sheet and cash flow all look good? What are you willing to sacrifice to enable the company to achieve its short- and long-term financial goals?
7. In what order do praise, financial advancement and personal accomplishment drive you?
This question featured prominently in one episode of “The Job Interview Show” over at CNBC. At first hearing, the question seems safe enough with a lot of leeway for opinionated responses but it’s source — the cofounder of accounting firm Xendoo (Lillian Roberts) — claimed it does have a right answer. She said this trick question can be a deal breaker because it reveals applicants’ core values and hierarchy of motivation. The right order should be 1) personal accomplishment; 2) financial advancement; and 3) praise.
Avoid making the impression that making money is your overarching motivation, which can be a red flag for some recruiters. Instead, always go for accomplishment. Saying that you are motivated by good work, excellence, positive results, and pride at what you do shows that you are an ideal employee driven by a strong work ethic. Last on the list should be “praise.” Roberts said that you won’t always receive recognition for the right things you are doing. That, unfortunately is the real world. Instead, being adequately motivated by personal pride and satisfaction should be a core attribute.
8. Have you ever considered being an entrepreneur?
Be wary of this question. Being innovative, creative, resourceful, and results-oriented are wonderful traits across the board. However, these have been closely linked to entrepreneurship over the years. In job interviews, it is better to qualify that you possess one or more of these characteristics but you rather use them as part of a larger organization you can be proud of. Mention that instead of seeing yourself as an entrepreneur, claim that you are more of an “intrapreneur,” which refers to highly creative and innovative individuals positively transforming the organizations that employ them.
If you claim that you are entrepreneurial and are planning to set up your own company, then that could signal either an unwanted level of independence or an unclear path for the company to recoup its onboarding and training investments on you.
If you have prior experience at owning your own business or earning a living as an independent contractor, turn the tables around by saying you’ve already experienced being away from a corporate environment or working in a team and that it’s really not for you. Mention that you miss the highly specialized functions of a finance professional.
9. What is working capital?
Working capital is usually defined as current assets less current liabilities. It shows how much cash has been converted into items such as inventories and receivables and how much of it is needed to settle short-term obligations for the year.
10. What is EBITDA?
EBITDA (Earnings before Interest, Depreciation, Taxes and Amortization) indicates a company’s Profits (Total Revenue - Total Expenses) before other relevant deductions such as taxes and interest expense have been computed.
11. How would a 10% increase in equity impact your income statement?
This is a trick question. Any increase in equity, which is itemized in the Balance Sheet and Cash Flow won’t get reflected on the Income Statement. Instead, net income computed at the bottom of the Income Statement gets reflected as part of Retained Earnings under Equity on the Balance Sheet.
12. Please cite and differentiate the three main types of financial statements.
The three main financial statements are —
- The Balance Sheet — the document showing a company’s assets and liabilities as well as the equity of its shareholders.
- The Income Statement — the document showing the items comprising a company’s revenue and expenses and serves as the key indicator of the organization’s profitability.
- The Cash Flow Statement — the document that records how money moves through the operating, investing, and financing activities of an organization.
Net Income from the Income Statement gets reflected on a) the Cash Flow Statement as Net Income from Operations; and b) the Balance Sheet as Retained Earnings.
13. Which statement do you think is the best one for assessing the financial state of a company?
This can be a trick question but rooting for the Cash Flow Statement might be your safest and more correct bet. That is because the Cash Flow Statement shows how much cash the company is actually earning and spending, serving as the quick reference for ascertaining the actual liquidity of a business. While the Income Statement shows a snapshot of the company’s profitability, it does not provide a complete picture. Neither does the Balance Sheet which shows assets and liabilities but lacks adequate metrics for evaluating business performance.
14. Is it possible for a company to have positive net income or cash flows and still go bankrupt?
Yes. Positive profits may be posted as a result of fraudulent accounting practices by unscrupulous or malicious accountants. These have had historic examples where company employees and customers got stiffed, leading to lawsuits and jail terms.
Positive profits may also reflect actual figures but do not preclude the possibility of the company’s accounts receivables rising to unsustainable levels, or working capital dangerously diluted by settling huge amounts of accounts payable. Left unchecked, rising levels of AR or plunging levels of working capital will eventually bring a business to its knees.
Meanwhile, positive cash flows generally indicate healthy business but some factors such as extending payables, selling off inventories, and diminishing profitability trends may not be reflected in a snapshot but do indicate dire straits ahead for the company.
15. What can drive M&As?
There are many reasons why companies opt for the M&A route. Some good, some bad, and a few even involve a “hostile takeover.” Some companies go through mergers or acquisitions to attain economies of scale or achieve cost savings and synergies with allied organizations. Many tech giants use it to diversify (gain a foothold in new markets) or acquire companies that specialize in advanced and emergent technologies (consider Google acquiring YouTube and DeepMind). Others take the M&A route to gain greater market share or eliminate a likely competitor (consider Facebook buying Instagram). Supply chain control can also be a strong motivation as indicated by the business buying behavior of Amazon.
Always show a positive bottom line
Finance is a highly rewarding but competitive field. Many financial analysts, advisors and managers take home six-figure salaries but not everyone make it to their level.
For starters, applicants for a finance-based role should always exude value. During interviews, candidates should clearly articulate how they can positively contribute to business growth over the long term. If you have been shortlisted for an interview, make sure you bring a ton of value (research, practice, attitude) with you to the table.
Brush up on your industry knowledge with GoSkills finance courses, including financial modeling, finance for operations managers, and for project managers. And check out our other guides to acing job interviews in industries like project management, graphic design, and front-end web development.
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Interested in Finance?
Learn all about it in our comprehensive (and free) ebook!