70+ 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.

The probability of getting at least one king while picking 2 cards from a deck at random is 15/221.

• To calculate the probability, we need to find the number of favorable outcomes and the total number of possible outcomes.

• There are 4 kings in a deck of 52 cards.

• The number of ways to choose 2 cards from a deck of 52 is given by the combination formula C(52, 2) = 1326.

• The number of ways to choose 2 cards without any king is given by the combination formula C(48, 2) = 1128.

• Therefo...read more

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

The three financial statements (income statement, balance sheet, and cash flow statement) are linked together through the flow of information and transactions.

• The income statement shows the company's revenues, expenses, and net income or loss for a specific period. It provides information on the company's profitability.

• The net income or loss from the income statement is then transferred to the balance sheet as retained earnings or accumulated deficit.

• The balance sheet provide...read more

To narrow down on an investment for the long term, one must consider various factors such as financial performance, industry trends, competitive advantage, and management quality.

• Evaluate the financial performance of the company, including revenue growth, profitability, and cash flow.

• Analyze industry trends and growth potential to identify sectors with long-term growth prospects.

• Assess the competitive advantage of the company, such as unique products or services, strong brand...read more

x company should target the market segment that has a high demand for their product and where they can differentiate themselves from competitors.

• Identify the target demographic based on age, gender, income level, etc.

• Analyze market trends and consumer behavior to determine potential demand.

• Consider geographical locations where the product is likely to be popular.

• Evaluate competitors' target markets to find gaps or opportunities.

• Conduct market research and surveys to gather in...read more

A diversified portfolio allocation for long-term investing

• Diversify across asset classes to reduce risk

• Consider the investor's risk tolerance and investment goals

• Allocate a portion to equities for potential growth

• Include fixed income assets for stability and income

• Consider alternative investments for diversification

• Rebalance the portfolio periodically to maintain desired allocation

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

The number of seats in Wankhede Stadium can be found through official stadium capacity records, online sources, or by contacting the stadium management.

• Check official stadium capacity records

• Search online for information on Wankhede Stadium seating capacity

• Contact Wankhede Stadium management for accurate seat count

The average daily water consumption within a 1 km radius of my area is approximately 500,000 liters.

• The water consumption can vary depending on the population density and availability of water sources.

• Factors such as residential, commercial, and industrial activities can influence the consumption.

• Data from local water supply authorities or surveys can provide more accurate figures.

• Examples of water consumption activities include drinking, cooking, bathing, irrigation, and ind...read more

FCF can be derived from EBIT, EBITDA, and NI by adjusting for taxes, non-cash expenses, and changes in working capital.

• To calculate FCFF from EBIT, subtract taxes and add back non-cash expenses (depreciation and amortization).

• To calculate FCFF from EBITDA, subtract taxes, add back non-cash expenses, and deduct capital expenditures.

• To calculate FCFF from NI, add back non-cash expenses, deduct taxes, and deduct changes in working capital.

• FCFF = EBIT * (1 - Tax Rate) + Depreciat...read more

The discount rate used in the DCF model is calculated by considering the risk-free rate, equity risk premium, and beta.

• The discount rate is the rate of return required by an investor to invest in a particular asset or project.

• It is calculated by adding the risk-free rate to the product of equity risk premium and beta.

• The risk-free rate represents the return on a risk-free investment, such as government bonds.

• Equity risk premium is the additional return required by investors f...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.

The three financial statements are the income statement, balance sheet, and cash flow statement, each providing different insights into a company's financial performance.

• Income statement shows a company's revenues and expenses over a period of time, resulting in net income or loss.

• Balance sheet provides a snapshot of a company's assets, liabilities, and shareholders' equity at a specific point in time.

• Cash flow statement details the cash inflows and outflows from operating, i...read more

Private equity firms are investment firms that pool capital from investors to acquire and invest in private companies.

• Private equity firms raise funds from institutional investors, such as pension funds and endowments, as well as high-net-worth individuals.

• These firms use the raised capital to acquire ownership stakes in private companies.

• Private equity firms aim to improve the financial performance of the acquired companies and create value through operational improvements, ...read more

Free Cash Flow is calculated by subtracting capital expenditures from operating cash flow.

• Free Cash Flow (FCF) is a measure of a company's ability to generate cash after accounting for its capital expenditures.

• To calculate levered FCF, subtract interest expense and taxes from FCF.

• To calculate unlevered FCF, exclude interest expense and taxes from FCF.

• The formula for FCF is: FCF = Operating Cash Flow - Capital Expenditures.

• Operating Cash Flow can be found in the company's cash...read more

Global inflation is a complex issue with various factors influencing it.

• Global inflation is influenced by factors such as monetary policy, fiscal policy, supply and demand dynamics, and geopolitical events.

• Central banks play a crucial role in managing inflation through interest rate adjustments and other monetary measures.

• Inflation can have both positive and negative impacts on economies and individuals.

• Examples of recent global inflation scenarios include the impact of COVID...read more

Compliance ensures adherence to laws, regulations, and internal policies. Compliance auditors assess and monitor compliance activities.

• Compliance involves following laws, regulations, and internal policies to ensure ethical business practices.

• Compliance auditors conduct audits to assess if organizations are following relevant laws and regulations.

• They review processes, procedures, and documentation to identify areas of non-compliance and recommend corrective actions.

• Complianc...read more

The three basic financial statements are the income statement, balance sheet, and cash flow statement.

• Income statement: Shows a company's revenues and expenses over a specific period of time.

• Balance sheet: Provides a snapshot of a company's financial position at a specific point in time, including assets, liabilities, and equity.

• Cash flow statement: Reports the cash generated and used by a company during a specific period of time.

Depreciation affects all three financial statements: income statement, balance sheet, and cash flow statement.

• Depreciation is an expense that reduces net income on the income statement.

• Depreciation reduces the value of assets on the balance sheet.

• Depreciation is added back to net income on the cash flow statement as it is a non-cash expense.

• Depreciation affects the calculation of key financial ratios such as return on assets and cash flow from operations.

DCF is a valuation method that estimates the future cash flows of a company and discounts them to their present value. WACC is the weighted average cost of capital.

• DCF stands for Discounted Cash Flow

• It is a valuation method used to estimate the value of an investment based on its future cash flows

• It involves projecting future cash flows, determining a discount rate, and calculating the present value of those cash flows

• WACC stands for Weighted Average Cost of Capital

• It is the ...read more

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

Equity value is the value of a company's shareholders' equity, while enterprise value is the total value of a company including debt and equity.

• Equity value only considers the value of a company's equity, which is calculated as the market capitalization minus net debt.

• Enterprise value takes into account both the equity and debt of a company, and is calculated as market capitalization plus debt minus cash.

• Equity value is what shareholders would receive if a company were to be ...read more

A Discounted Cash Flow (DCF) model is a financial valuation method used to estimate the value of an investment based on its future cash flows.

• DCF models calculate the present value of expected future cash flows by discounting them using a required rate of return.

• It is commonly used in investment analysis to determine the intrinsic value of a company or project.

• The model considers the time value of money, as cash received in the future is worth less than the same amount receiv...read more

Approximately 500 million coffee cups are sold in America in a week.

• Consider the population of America and the percentage of coffee drinkers

• Take into account the number of coffee shops and their average sales per day

• Factor in the consumption habits of Americans, such as daily coffee intake

The footfall in Terminal 3 of an airport can range from a few thousand to tens of thousands in a day.

• Footfall in Terminal 3 can vary based on factors like time of day, day of the week, and season.

• During peak travel times, footfall can reach tens of thousands, while during off-peak times it may be in the thousands.

• Events or special occasions can also impact footfall, leading to higher numbers on certain days.

Financial statements are interlinked and provide a comprehensive view of the company's financial health.

• The income statement shows revenue and expenses, which affect the net income on the balance sheet.

• The cash flow statement shows how cash is generated and used, which affects the cash balance on the balance sheet.

• The balance sheet shows the company's assets, liabilities, and equity, which are affected by the income statement and cash flow statement.

• Understanding the interpla...read more

Cash basis recognizes revenue and expenses when cash is actually received or paid, while accrual basis recognizes revenue and expenses when they are incurred.

• Cash basis only records transactions when cash is exchanged, regardless of when the revenue is earned or expenses incurred.

• Accrual basis records revenue when it is earned and expenses when they are incurred, regardless of when cash is exchanged.

• Cash basis is simpler and easier to understand, while accrual basis provides ...read more

Investment management involves managing financial assets to achieve specific investment goals.

• Investment management is the professional management of various securities and assets to meet specific investment objectives.

• Types of investment management include active management, passive management, and alternative investments.

• Active management involves frequent buying and selling of securities in an attempt to outperform the market.

• Passive management involves tracking a market i...read more

Buy side refers to firms that buy securities for investment purposes, while sell side refers to firms that sell securities to clients.

• Buy side firms include mutual funds, pension funds, and hedge funds.

• Sell side firms include investment banks, brokerages, and market makers.

• Buy side firms focus on generating returns for their clients by making investment decisions.

• Sell side firms facilitate transactions and provide services such as research and trading.

• Buy side firms typically...read more

Decreasing depreciation impacts all three financial statements differently.

• Income statement: Decreasing depreciation will result in higher net income as expenses are reduced.

• Balance sheet: Decreasing depreciation will lead to higher total assets and equity due to lower accumulated depreciation.

• Cash flow statement: Decreasing depreciation will increase cash flow from operations as net income increases.

• Example: If depreciation expense decreases by $10,000, net income will incre...read more

Investment banks are financial institutions that provide various services to corporations, governments, and individuals.

• Investment banks help companies raise capital by underwriting securities offerings.

• They provide advisory services for mergers and acquisitions, helping clients with strategic decisions.

• Investment banks also engage in trading activities, buying and selling securities on behalf of clients.

• They offer research and analysis on financial markets, providing insight...read more

Mean is the average of a set of numbers, while median is the middle value when the numbers are arranged in order.

• Mean is calculated by adding all numbers in a set and dividing by the total count.

• Median is the middle value when the numbers are arranged in order.

• For example, in the set {2, 4, 6, 8, 10}, the mean is 6 and the median is 6.

• If there is an even number of values, the median is the average of the two middle values.

Approximately 1.5 million passengers travel through the Yellow Line Delhi Metro daily.

• The Yellow Line of the Delhi Metro is one of the busiest lines in the network.

• It connects Samaypur Badli in Delhi to HUDA City Centre in Gurugram.

• The line covers a total distance of 49 kilometers and has 37 stations.

• The Yellow Line is known for its high ridership due to its connectivity to key areas like Connaught Place and Gurgaon.

VLOOKUP is a function in MS-Excel used to search for a value in a table and return a corresponding value.

• VLOOKUP stands for 'Vertical Lookup'.

• It is used to search for a value in the first column of a table and return a value in the same row from a specified column.

• Syntax: VLOOKUP(lookup_value, table_array, col_index_num, [range_lookup]).

• Example: =VLOOKUP(A2, B2:D10, 3, FALSE) - searches for the value in cell A2 in the range B2:D10 and returns the value in the 3rd column.

• The l...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.

WACC stands for Weighted Average Cost of Capital, equity value is the market value of a company's equity, and enterprise value is the total value of a company including debt and equity.

• WACC is a calculation of the average cost of capital a company faces, taking into account the proportion of debt and equity in the capital structure.

• Equity value is calculated by multiplying the number of outstanding shares by the current market price per share.

• Enterprise value is the sum of a ...read more

It is difficult to provide an exact number of iPhones in India as it constantly changes due to sales and imports.

• The number of iPhones in India can vary based on factors such as sales, imports, and upgrades.

• Apple does not typically release specific sales numbers for individual countries.

• One could estimate the number of iPhones in India by looking at market research reports or industry trends.

FCFF is a measure of a company's financial performance and is used in valuation to determine the value of a firm's equity.

• FCFF stands for Free Cash Flow to Firm, which represents the cash flow available to all providers of capital, both debt and equity.

• It is calculated as Operating Cash Flow minus Capital Expenditures minus Taxes plus Depreciation & Amortization.

• FCFF is used in valuation models such as Discounted Cash Flow (DCF) to estimate the intrinsic value of a company.

• By...read more

Types of financial statements include income statement, balance sheet, cash flow statement, and statement of changes in equity.

• Income statement: Shows a company's revenues and expenses over a specific period of time.

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

• Cash flow statement: Details the cash inflows and outflows of a company during a specific period.

• Statement of changes in equity: Summarizes the changes in a company's ...read more

Compliance refers to adhering to laws, regulations, guidelines, and internal policies to ensure ethical and legal conduct within an organization.

• Compliance involves following laws, regulations, and guidelines set by regulatory bodies.

• It also includes adhering to internal policies and procedures of the organization.

• Compliance ensures ethical conduct, risk mitigation, and maintaining the reputation of the organization.

• Non-compliance can result in fines, legal actions, and damag...read more

The number of customers in a Starbucks outlet per day varies depending on various factors.

• The number of customers can vary based on the location of the outlet.

• Peak hours like mornings and evenings tend to have more customers.

• Weekdays may have more customers compared to weekends.

• Special promotions or events can attract more customers.

• The size of the outlet and seating capacity can also impact the number of customers.

Query to retrieve last month's data on the 1st of every month

• Use the DATEADD function to subtract a month from the current date

• Filter the results to only include data from the 1st of the month

• Example: SELECT * FROM table_name WHERE date_column = DATEADD(month, -1, DATEADD(month, DATEDIFF(month, 0, GETDATE()), 0))

SLM method evenly distributes depreciation over the useful life of an asset, while WDV method accelerates depreciation in the early years.

• SLM method charges a fixed amount of depreciation each year, calculated as (Cost - Residual Value) / Useful Life

• WDV method charges higher depreciation in the early years and lower depreciation in the later years, calculated as (Book Value - Residual Value) * Depreciation Rate

• SLM is simpler to calculate and provides a more even expense recog...read more

Valuing a start-up involves assessing its potential, market size, competition, team, and financials.

• Assess the start-up's potential for growth and scalability

• Evaluate the market size and potential demand for the product/service

• Analyze the competition and the start-up's unique value proposition

• Evaluate the team's experience, skills, and track record

• Assess the financials, including revenue, expenses, and funding history

• Consider any potential risks and challenges

• Use a combinatio...read more

Beta in DCF is a measure of a stock's volatility in relation to the overall market.

• Beta is a numerical value that measures the volatility of a stock compared to the market as a whole.

• A beta of 1 indicates that the stock's price will move with the market.

• A beta greater than 1 indicates the stock is more volatile than the market, while a beta less than 1 indicates the stock is less volatile.

• For example, a stock with a beta of 1.2 is expected to move 20% more than the market in ...read more

IP addresses are unique numerical labels assigned to devices connected to a network to identify and communicate with each other.

• IP addresses are used to identify devices on a network.

• They consist of a series of numbers separated by periods.

• There are two types of IP addresses: IPv4 and IPv6.

• Example of IPv4 address: 192.168.1.1

• Example of IPv6 address: 2001:0db8:85a3:0000:0000:8a2e:0370:7334

NAV is the Net Asset Value of a fund, while GAV is the Gross Asset Value. The difference between the two represents the fees and expenses of the fund.

• NAV is calculated by subtracting liabilities from assets, while GAV includes all assets without subtracting liabilities.

• The NAV is used to determine the value of each share in a fund, while GAV gives a broader view of the total value of the fund.

• The difference between NAV and GAV represents the fees and expenses of the fund, suc...read more

Different commands used in system engineering

• Command line interface (CLI) commands

• Network commands (ping, traceroute)

• File management commands (ls, cp, mv)

• Process management commands (ps, kill)

• System monitoring commands (top, htop)

• Package management commands (apt-get, yum)

A VPN, or Virtual Private Network, is a secure connection between a user and a private network over the internet.

• Encrypts data to ensure privacy and security

• Allows users to access network resources remotely

• Masks IP address to maintain anonymity

• Commonly used for remote work, accessing geo-blocked content, and enhancing online security

• Examples include NordVPN, ExpressVPN, and OpenVPN

My strengths include strong problem-solving skills, attention to detail, and the ability to work well in a team.

• Strong problem-solving skills - I enjoy analyzing complex issues and finding effective solutions.

• Attention to detail - I am meticulous in my work and strive for accuracy in all tasks.

• Teamwork - I collaborate effectively with colleagues to achieve common goals.

SQL query using aggregate functions to perform calculations on a dataset

• Use aggregate functions like SUM, AVG, COUNT, MIN, MAX to perform calculations on a dataset

• Group data using GROUP BY clause to apply aggregate functions on specific groups

• Filter data using HAVING clause after applying aggregate functions

Financial institutions are organizations that provide financial services to customers, such as banks, credit unions, and investment firms.

• Banks (e.g. JPMorgan Chase, Bank of America)

• Credit unions (e.g. Navy Federal Credit Union, State Employees' Credit Union)

• Investment firms (e.g. Goldman Sachs, Fidelity Investments)

Financial statements are formal records of the financial activities and position of a business, organization, or individual.

• Financial statements include balance sheets, income statements, cash flow statements, and statements of changes in equity.

• They provide information on the financial performance, financial position, and cash flows of an entity.

• These statements are used by investors, creditors, and management to make decisions about the entity's financial health and future ...read more

An IP address is a unique numerical label assigned to each device connected to a computer network.

• IP addresses are used to identify and locate devices on a network.

• There are two types of IP addresses - IPv4 and IPv6.

• IPv4 addresses are written in the format of four sets of numbers separated by periods (e.g. 192.168.1.1).

• IPv6 addresses are written in a hexadecimal format and are longer than IPv4 addresses.

• IP addresses can be static (manually assigned) or dynamic (assigned by a ...read more

OSI layers are a conceptual framework used to understand how different networking protocols interact.

• Layer 1 - Physical layer: Deals with physical connections and transmission of raw data.

• Layer 2 - Data link layer: Manages data transfer between devices on the same network.

• Layer 3 - Network layer: Handles routing and forwarding of data packets between different networks.

• Layer 4 - Transport layer: Ensures reliable data transfer between end systems.

• Layer 5 - Session layer: Manag...read more

IP addresses are divided into classes based on the number of network bits and host bits.

• There are five classes of IP addresses: A, B, C, D, and E.

• Class A addresses have the first bit set to 0 and can range from 1.0.0.0 to 126.0.0.0.

• Class B addresses have the first two bits set to 10 and can range from 128.0.0.0 to 191.255.0.0.

• Class C addresses have the first three bits set to 110 and can range from 192.0.0.0 to 223.255.255.0.

• Class D addresses have the first four bits set to 1...read more