Finance Interview Questions

Q: Why do capital expenditures increase assets (PP&E), while other cash outflows, like paying salary, taxes, etc., do not create any asset, and instead instantly create an expense on the inco e state ent that reduces e!uity "ia retained earnings# Q: Walk e through a cash flow state ent.

Q: What is working capital# Q: $s it possi%le for a co pany to show positi"e cash flows %ut %e in gra"e trou%le# Q: &ow is it possi%le for a co pany to show positi"e net inco e %ut go %ankrupt# Q: $ %uy a piece of e!uip ent, walk e through the i pact on the ' financial state ents

Q: Why are increases in accounts recei"a%le a cash reduction on the cash flow state ent# Q: &ow is the inco e state ent linked to the %alance sheet# Q: What is goodwill# Q: What is a deferred tax liability and why might one be created? Q: What is a deferred tax asset and why ight one %e created#

Q: What is the link %etween the (alance )heet and the )tate ent of *ash +lows# Q: What happens to each of the three pri ary financial state ents when you change a) gross argin %) capital expenditures c) any other change# Q: What is the difference %etween the ,P- and W,**# Q: &ow would you "alue a co pany with no re"enue# Q: What is (eta# Q: Which industries are you interested in# What are the Q: $s ./ a high P0E ratio# Q: 1escri%e a typical co pany2s capital structure. Q: $f you add a risky stock into a portfolio that is already risky, how is the o"erall portfolio risk affected# Q: What kind of stocks would you issue for a start3up# Q: When should a co pany %uy %ack stock# Q: $s the di"idend paid on co deducti%le for the co pany# on stock taxa%le to shareholders# Preferred stock# $s it tax ultiples that you use for those industries#

Q: When should a co pany issue stock rather than de%t to fund its operations#
3

Q: Why would a co pany distri%ute its earnings through di"idends to co Q: What is insider trading and why is it illegal#

on stockholders#

1. What is the difference between P & L a\c and income & expenditure statement? 2. what is minority interest? 3. WH ! "# $%!!%&L"'( ') WH ! "# !%PL"'(? *. What is $(P? How is it ca+cu+ated? ,. What is free f+oat mar-et capita+isation? .. What is /a++ %ption? 0. Which debt instrument is preferred by the company for financin1? 2. Which 1o3ernment body ca+cu+ates 4)P and inf+ation of "ndia? 5. What are the -ey steps in3o+3ed in formu+atin1 treasury po+icy of a firm? 16. What is the difference between )7 & 4)7? 11. What is the meanin1 of portfo+io mana1ement? 12. what comes under portfo+io mana1ement 13. /an anyone supp+y 8"9/% materia+ in # P? 1*. What is amortisation? 1,. What is authori:ed /apita+? 1.. What you wi++ find in $a+ance #heet? 10. What is the difference between stoc- & shares? 12. What is another name of ';#( 15. What is the difference between prepaid expenses and pre+iminary expenses? 26. What is an auction? Why does it occur? 21. What is $eta? 22. What is di+uted (P#? "n finance what is the use of di+uted (P#? 23. How to predict capita+ ade<uacy ratio of icici 13.*= and sbi 11=...which one is better and how? 2*. What is the functiona+ity of #toc- exchan1e 2,. What is a swap? 2.. What is di3idend? 20. What is the meanin1 of L">?")"!;? 22. What is Proposa+@%ffer? (xp+ain the essentia+ of a acceptance. 25. How does rupee stren1then when the 7eser3e $an- of "ndia se++s do++ars in the mar-et???? 36. What is #hares #p+it? 31. )efine +e3era1e? (xp+ain its typesA re+ati3e si1nificance and their features? 32. What is $ear mar-et? 33. What is "n3entory? 3*. What is 1oodwi++? How do you ca+cu+ate it? 3,. WhatBs )o++ex 36? 3.. What is the difference between #('#(C and '"8!;????? 30. What re Hed1e 8unds? 32. ($"! stands for? 35. What is the effect of /77 hi-e on mar-et? *6. How cash enters in mar-et? *1. What is re3erse repo rate?
3

*2. What is Da+ue at 7is- approach? *3. What is reconci+iation of assets? **. What is 7ea+ account? *,. What is pay 7o++ #a3in1s #cheme? *.. What is 4)P what is D !? *0. What is #L7? *2. What is the difference amon1 repo rateA re3erse repo rate and ban- rate? *5. What do you mean by 8orfeited shares? ,6. What is difference between factorin1 and +easin1? ,1. What is 7%(? ,2. What is the difference between sin1+e point tax and 3a+ue added tax? ,3. What is $7#? ,*. What is the difference between profit and 1ain? ,,. What is meant by arbitra1e? ,.. What is $ond? ,0. What do u mean by capita+ ade<uacy ratio? ,2. What is net present 3a+ue? ,5. What is mean by fide+ity fundsA inception dateA ri1ht issueA and stoc- sp+it? .6. What is con3ertib+e debenture? What is its effect on (P#? .1. What is P(C $an-in1? .2. what is mean by )ue )i+i1ence .3. How can you create a secret reser3e? .*. What is !reasury $i++s? .,. Who are underwriters? What is their wor-? ... What is differed re3enue? .0. What is "nf+ation 7is-? What are <uic- assets? 4i3e me some examp+es. .2. )ifference between future contract and forward contract? .5. What is crosso3er rate? 06. What is "nterim )i3idend 01. Which (xchan1e determines 8orei1n (xchan1e@/urrency 7ate? 02. What is the officia+ criterion for b+ue9chip companies? 03. What is the diff amon1 repo rateA re3erse repo rate and ban- rate? 0*. What is #econdary &ar-et? 0,. What are the 3arious methods to curb inf+ation?