10+ IBM Interview Questions and Answers

Answering how to show a transaction involving cash and loan in financial statements.

• The cash purchase of an asset will be shown as a decrease in cash on the cash flow statement and as an increase in assets on the balance sheet.

• The purchase made through bank loan will be shown as an increase in liabilities on the balance sheet and as an increase in cash on the cash flow statement.

• The loan taken will be shown as an increase in liabilities on the balance sheet and as an increase...read more

I have read about recent topics in finance such as cryptocurrency, ESG investing, and the impact of COVID-19 on the economy.

• Cryptocurrency and its increasing popularity as an investment option

• ESG (Environmental, Social, and Governance) investing and its growing importance in the finance industry

• The impact of COVID-19 on the economy and financial markets, including government stimulus packages and market volatility

We subtract increase in current assets in cash flow statement under operating activities to adjust for cash inflows/outflows.

• Increase in current assets means cash is tied up in inventory, accounts receivable, etc.

• This reduces the amount of cash available for operating activities.

• Subtracting this increase adjusts for the cash inflows/outflows.

• Examples include increase in accounts receivable, inventory, prepaid expenses, etc.

Capital account convertibility refers to the freedom to convert local financial assets into foreign financial assets and vice versa.

• Capital account convertibility allows for unrestricted flow of capital in and out of a country.

• It can lead to increased foreign investment and economic growth.

• However, it can also lead to volatility in the economy and currency fluctuations.

• India has been cautious in implementing full capital account convertibility due to concerns about its impact...read more

A cash flow statement typically has three sections: operating activities, investing activities, and financing activities.

• The first section shows cash flows from operating activities, such as sales revenue and expenses.

• The second section shows cash flows from investing activities, such as buying or selling assets.

• The third section shows cash flows from financing activities, such as issuing or repaying debt or equity.

• The net change in cash for the period is calculated by adding...read more

Financial statements are interrelated as they provide different perspectives of a company's financial performance.

• The income statement shows the company's revenue, expenses, and net income, which affects the balance sheet.

• The balance sheet shows the company's assets, liabilities, and equity, which affects the cash flow statement.

• The cash flow statement shows the company's cash inflows and outflows, which affects the income statement and balance sheet.

• Changes in one statement ...read more

Negative working capital is when a company's current liabilities exceed its current assets.

• It means the company may have trouble paying its short-term debts

• It can indicate efficient management of inventory and accounts receivable

• Examples include Amazon and Walmart

• It is common in industries with high inventory turnover and short payment cycles

Quick ratio formula is (Current Assets - Inventory) / Current Liabilities.

• Quick ratio is a measure of a company's ability to meet its short-term obligations.

• It is also known as the acid-test ratio.

• The formula excludes inventory from current assets as it may not be easily converted to cash.

• A quick ratio of 1:1 or higher is considered good.

• Quick ratio = (Current Assets - Inventory) / Current Liabilities.

A cash flow statement shows the inflows and outflows of cash for a specific period of time.

• The statement is divided into three sections: operating activities, investing activities, and financing activities.

• Operating activities include cash received from customers and cash paid to suppliers.

• Investing activities include cash spent on purchasing assets and cash received from selling assets.

• Financing activities include cash received from issuing stocks or bonds and cash paid for ...read more

To fill a 4L jug using 3L and 5L jugs, you need to transfer water between the jugs to reach the desired amount.

• Fill the 5L jug completely, then pour water from it into the 3L jug until it is full. This leaves 2L in the 5L jug.

• Empty the 3L jug and pour the remaining 2L from the 5L jug into it.

• Fill the 5L jug again and pour water into the 3L jug until it is full, which will leave exactly 4L in the 5L jug.