10+ ICICI Bank Interview Questions and Answers

The treasury stock method is used to calculate the potential dilution of stock options and warrants. It assumes that the proceeds from the exercise of options and warrants are used to buy back shares at the average market price.

• TSM calculates the dilutive effect of stock options and warrants

• It assumes that the proceeds from the exercise of options and warrants are used to buy back shares at the average market price

• The difference between the number of shares issued and the num...read more

The 3 financial statements are linked through the flow of information and transactions between them.

• The income statement shows revenue and expenses for a period of time, which affects the retained earnings on the balance sheet.

• The balance sheet shows assets, liabilities, and equity at a specific point in time, which affects the cash flow statement.

• The cash flow statement shows the inflow and outflow of cash during a period of time, which affects the balance sheet.

• Changes in t...read more

WACC stands for Weighted Average Cost of Capital. It is the average cost of all the capital used by a company.

• WACC is used to determine the minimum return a company must earn on its investments to satisfy its investors.

• It is calculated by taking the weighted average of the cost of debt and the cost of equity.

• The formula for WACC is: WACC = (E/V x Re) + ((D/V x Rd) x (1 - Tc)), where E is the market value of the company's equity, V is the total market value of the company's ca...read more

Adj. EBITDA is calculated by adding back non-recurring expenses to EBITDA. Non-recurring items include one-time expenses or gains.

• Adj. EBITDA = EBITDA + non-recurring expenses

• Non-recurring items include one-time expenses or gains such as restructuring costs, legal settlements, or gains from asset sales

• Non-recurring items are typically disclosed in the footnotes of financial statements

Enterprise value is the total value of a company, including debt and equity.

• EV is calculated by adding market capitalization, debt, and minority interest, and then subtracting cash and cash equivalents.

• It represents the amount of money required to acquire the entire business.

• EV is a more comprehensive measure of a company's value than market capitalization alone.

• EV can be used to compare companies with different capital structures.

• Example: Company A has a market cap of $1 bil...read more

Trading comps and transaction comps are valuation methods used in investment banking.

• Trading comps involves comparing a company's financial metrics to those of its peers in the same industry.

• Transaction comps involves analyzing the financial metrics of companies that have recently been acquired or sold.

• Both methods are used to determine the value of a company in a potential merger or acquisition.

• Trading comps are based on public information, while transaction comps are based ...read more

I am a finance professional with expertise in financial projects, financial ratios, and their impact on share prices.

• I have experience in leading finance projects from start to finish

• I am well-versed in analyzing financial ratios and interpreting their implications

• I understand how financial ratios can impact share prices and can provide insights on this

• I have worked with various financial ratios such as liquidity ratios, profitability ratios, and solvency ratios

• I am familiar ...read more

Minority interest refers to the ownership of less than 50% of a company's shares by an investor or group of investors.

• It is also known as non-controlling interest.

• The minority interest shareholders have limited control over the company's operations.

• Their share of profits is proportionate to their ownership percentage.

• Minority interest is reported on the balance sheet as a liability.

• Example: If Company A owns 80% of Company B, then Company B's minority interest would be 20%.

The three financial statements (income statement, balance sheet, cash flow statement) are interconnected and provide a comprehensive view of a company's financial performance.

• The income statement shows the company's revenues and expenses, which ultimately impact its net income.

• The net income from the income statement flows into the balance sheet as retained earnings, affecting the company's equity.

• The cash flow statement shows how the company's operations, investments, and fi...read more

Financial leverage refers to the use of debt to increase the potential return on investment.

• Financial leverage involves using borrowed funds to increase the return on equity.

• It magnifies both gains and losses for investors.

• Examples include taking out a loan to invest in a business or using margin to buy stocks.

Enterprise value is the total value of a company, including debt and equity.

• Calculated as market capitalization plus debt minus cash and cash equivalents

• Represents the true value of a company as it includes all stakeholders

• Used to compare companies of different sizes and capital structures

• Example: Company A has a market cap of $1 billion, debt of $500 million, and cash of $100 million. Its enterprise value is $1.4 billion.

FCFE stands for Free Cash Flow to Equity. It represents the cash flow available to the company's equity shareholders after all expenses, reinvestments, and debt payments.

• FCFE is calculated as Net Income - Net Capital Expenditure - Change in Working Capital + Net Borrowing

• It is used to determine the amount of cash that can be distributed to equity shareholders

• FCFE is important for investors as it helps in evaluating the company's ability to pay dividends and fund growth opport...read more