10+ Morningstar Data Analyst Interview Questions and Answers

Financial statements, cost sheet, debt to equity ratio, stock option, stock split, lease financing, profitability ratios.

• Financial statements are reports that show the financial performance of a company.

• Cost sheet of a bank includes interest expenses and income, while cost sheet of a manufacturing company includes direct and indirect costs.

• Debt to equity ratio is a financial ratio that shows the proportion of debt and equity used to finance a company's assets.

• Stock option is ...read more

The financial statements (BS, IS, CF) have common elements such as assets, liabilities, equity, revenue, expenses, and cash flows.

• Assets: resources owned by the company

• Liabilities: obligations owed by the company

• Equity: residual interest in the assets of the company

• Revenue: income generated by the company

• Expenses: costs incurred by the company

• Cash flows: inflows and outflows of cash

A stock split increases the number of shares outstanding and decreases the price per share, but does not affect the market capitalisation.

• Stock split does not affect the total value of the company

• Market capitalisation remains the same after a stock split

• Stock split increases the number of shares outstanding and decreases the price per share

• For example, if a company has 1 million shares outstanding and the stock splits 2-for-1, the company will have 2 million shares outstandin...read more

WASO is Wake After Sleep Onset, TSO is Total Sleep Time, and EPS is Earnings Per Share.

• WASO is the amount of time spent awake after initially falling asleep.

• TSO is the total amount of time spent sleeping, including both REM and non-REM sleep.

• EPS is a financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock.

• WASO and TSO are commonly used in sleep studies, while EPS is used in financial analysis.

Payables turnover ratio is a financial metric that measures how quickly a company pays off its suppliers.

• It is calculated by dividing the cost of goods sold by the average accounts payable balance.

• A high ratio indicates that a company is paying off its suppliers quickly, while a low ratio suggests that it is taking longer to pay its bills.

• The ratio can be used to assess a company's liquidity and its ability to manage its cash flow.

• For example, if a company has a cost of goods...read more

Amortization is the process of spreading out a loan into smaller, regular payments over a period of time.

• It is used to pay off a debt over time with regular payments

• Each payment includes both principal and interest

• The amount of interest decreases over time as the principal is paid off

• Examples include mortgages, car loans, and student loans

Bank reconciliation statement is a document that compares the bank statement with the company's accounting records.

• It helps to identify any discrepancies between the two records.

• It includes details of deposits, withdrawals, and bank charges.

• It ensures the accuracy of the company's financial records.

• It is usually prepared monthly.

• Example: If the bank statement shows a withdrawal of $100 but the company's records show a withdrawal of $80, the bank reconciliation statement will ...read more

Receivable turnover is a financial ratio that measures a company's efficiency in collecting its accounts receivable.

• Receivable turnover = Net Credit Sales / Average Accounts Receivable

• Net Credit Sales is the total sales made on credit minus any returns or allowances

• Average Accounts Receivable is the average of the beginning and ending accounts receivable balances

• A higher receivable turnover indicates that a company is collecting its receivables more quickly

• A lower receivable ...read more

A bond is a fixed income investment where an investor loans money to an entity which borrows the funds for a defined period of time at a variable or fixed interest rate.

• Bonds are issued by governments, municipalities, corporations, and other entities to raise capital.

• Investors purchase bonds as a way to earn interest income while preserving capital.

• The importance of bonds lies in their role as a source of funding for organizations and governments, as well as providing investo...read more

EPS is calculated by dividing the company's net income by the number of outstanding shares.

• EPS = Net Income / Outstanding Shares

• Net Income is the company's total earnings after expenses and taxes

• Outstanding Shares are the total number of shares issued by the company

• EPS is an important metric for investors to evaluate a company's profitability

• Higher EPS indicates better profitability and potential for higher dividends

A promissory note is a written promise to pay a specific amount of money at a certain time.

• It is a legal document that outlines the terms of a loan or debt.

• It includes the amount borrowed, interest rate, repayment schedule, and consequences of default.

• Examples include personal loans, student loans, and business loans.

• Promissory notes can be bought and sold as a form of investment.

• They are enforceable by law and can be used as evidence in court.

Cash flow statements have three main components: operating activities, investing activities, and financing activities.

• Operating activities: cash inflows and outflows from the company's core business operations.

• Investing activities: cash inflows and outflows from buying or selling long-term assets.

• Financing activities: cash inflows and outflows from borrowing or repaying debt, issuing or buying back stock, and paying dividends.

• Net cash flow: the sum of the cash inflows and out...read more

Goodwill is an intangible asset that represents the excess of the purchase price over the fair market value of a company's net assets.

• Goodwill is reported on the balance sheet as a non-current asset.

• It is not amortized but tested for impairment annually.

• Goodwill can arise from acquisitions of other companies or from internal business development.

• If the fair market value of the acquired company's net assets is higher than the purchase price, negative goodwill is recorded.

• Goodw...read more

EPS stands for Earnings Per Share, WASO stands for Weighted Average Shares Outstanding, and market cap is the total value of a company's outstanding shares.

• EPS is a financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock.

• WASO is the number of shares a company has issued and is used to calculate EPS.

• Market cap is calculated by multiplying a company's current share price by the total number of outstanding shares.

• For...read more

Liquidity ratio measures a company's ability to pay off its short-term debts using its liquid assets.

• Liquidity ratio is calculated by dividing a company's liquid assets by its short-term liabilities.

• The formula for liquidity ratio is: Liquidity Ratio = (Liquid Assets / Short-term Liabilities)

• Liquid assets include cash, marketable securities, and accounts receivable.

• Short-term liabilities include accounts payable, short-term loans, and current portion of long-term debt.