Swastika Investmart Investment Analyst Interview Questions and Answers

Numerical, logical and reading

Q1. Run me through a DCF
Ans. 
DCF is a valuation method used to estimate the value of an investment based on its future cash flows.
• DCF involves projecting future cash flows, discounting them to their present value, and summing them up to arrive at a present value estimate.

• The discount rate used in DCF is typically the weighted average cost of capital (WACC) or the required rate of return.

• DCF is commonly used in investment banking to value companies...read more
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Q2. What are trading comparables?
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Trading comparables are a valuation method used to determine the value of a company by comparing it to similar publicly traded companies.
• Trading comparables involve analyzing financial metrics such as revenue, EBITDA, and P/E ratios of similar companies in the same industry.

• This method assumes that the market values similar companies similarly, and can be used to determine a fair valuation for the company being analyze...read more
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Q1. Financial statements
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Q2. Beta and it's types
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Beta is a measure of a stock's volatility in relation to the market. There are three types of beta: levered beta, unlevered beta, and adjusted beta.
• Beta measures a stock's volatility in relation to the market. A beta of 1 means the stock moves in line with the market, while a beta greater than 1 is more volatile and less than 1 is less volatile.

• Levered beta includes the effects of debt on a company's capital structure.

• ...read more
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Q3. Cost of capital
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Cost of capital is the required return necessary to make a capital budgeting project, such as building a new factory, worthwhile.
• Cost of capital is the weighted average cost of debt and equity used by a company to finance its operations.

• It is the minimum return that a company must earn on its investments to maintain its market value and attract investors.

• Calculating cost of capital involves determining the cost of debt...read more
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Q4. Discounted cash flow
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Q5. Comparable company analysis
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Comparable company analysis involves evaluating a company's value by comparing it to similar companies in the same industry.
• Identify comparable companies based on industry, size, growth prospects, and financial metrics.

• Collect data on key financial metrics such as revenue, EBITDA, and multiples like P/E ratio.

• Calculate valuation multiples for the comparable companies and apply them to the target company to estimate its...read more
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Q6. Financial ratios
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Q1. Basic questions, mostly they will check your communication skills in the HR round.
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Q1. Few questions from the Resume.
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Q2. PE Ratio ROE ROIC Impact of Depreciation on the three statements. Tax Credit and Tax Exemption, which is more beneficial. Total Enterprise Value Minority Interest EPS Diluted EPS Trading Multiples like TEV...read more
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Q1. What is beta and alpha
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Beta and alpha are measures of a stock's volatility and performance compared to a benchmark index.
• Beta measures the volatility of a stock in relation to the overall market. A beta of 1 means the stock moves in line with the market, while a beta greater than 1 indicates higher volatility and less than 1 indicates lower volatility.

• Alpha measures the excess return of a stock compared to its expected return based on its be...read more
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Q2. What are the 3 financial statements and key ratios
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The 3 financial statements are Income Statement, Balance Sheet, and Cash Flow Statement. Key ratios include ROE, ROA, and Current Ratio.
• Income Statement shows a company's revenues and expenses over a period of time.

• Balance Sheet provides a snapshot of a company's financial position at a specific point in time.

• Cash Flow Statement tracks the flow of cash in and out of a company.

• Key ratios like Return on Equity (ROE), Ret...read more
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Q1. Linkage between the 3 financial analysis
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The linkage between the 3 financial analysis involves understanding how the income statement, balance sheet, and cash flow statement are interconnected.
• Income statement shows the company's profitability over a period of time.

• Balance sheet provides a snapshot of the company's financial position at a specific point in time.

• Cash flow statement tracks the inflow and outflow of cash within the company.

• Changes in one stateme...read more
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Q2. What is CFO? How do you calculate it
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CFO stands for Cash Flow from Operations. It is a measure of a company's ability to generate cash from its core business activities.
• CFO is calculated by starting with net income and adding back non-cash expenses (such as depreciation and amortization) and adjusting for changes in working capital.

• Formula: CFO = Net Income + Non-cash Expenses + Changes in Working Capital

• CFO is a key metric used by investors and analysts ...read more
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Q1. Finance basic questions
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Q2. Ratios and everything
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Q1. Basic HR questions
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Q1. They ask rapid questions.
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Q1. Whta is PE ratio ?
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PE ratio is the ratio of a company's stock price to its earnings per share (EPS).
• PE ratio helps investors determine the value of a company's stock.

• A high PE ratio may indicate that a stock is overvalued, while a low PE ratio may indicate undervaluation.

• PE ratio can vary by industry and should be compared to peers within the same industry.

• Formula: PE ratio = Stock price / EPS

• Example: If a company's stock price is $50 an
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Q1. Basic accounting principles
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Basic Accounting principles