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Pinakiin Design Interview Questions and Answers

Updated 5 Feb 2024
Popular Designations

Q1. 4. Show linking between Income Statement, Balance sheet and cash flow statement ?

Ans.

Linking between Income Statement, Balance sheet and cash flow statement

  • The net income from the income statement is added to the retained earnings in the balance sheet

  • Changes in assets and liabilities in the balance sheet affect the cash flow statement

  • Net cash flow from operating activities in the cash flow statement is derived from the income statement and balance sheet

  • Net cash flow from investing and financing activities in the cash flow statement is derived from the balance...read more

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Q2. 7. What is Cash Conversion Cycle?

Ans.

Cash Conversion Cycle is the time taken to convert inventory into cash.

  • It measures the efficiency of a company's cash flow.

  • It includes the time taken to sell inventory, collect receivables, and pay suppliers.

  • A shorter cycle indicates better cash flow management.

  • Formula: CCC = DIO + DSO - DPO

  • DIO = Days Inventory Outstanding, DSO = Days Sales Outstanding, DPO = Days Payable Outstanding

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Q3. 8. What is Deferred Tax Liability?

Ans.

Deferred Tax Liability is a balance sheet item that represents the amount of income tax that a company will owe in the future.

  • It arises due to temporary differences between the book and tax values of assets and liabilities

  • It is calculated using the tax rate that is expected to apply in the period when the liability is settled

  • It is a non-current liability and is reported on the balance sheet

  • Examples include depreciation and amortization expenses, and differences in revenue rec...read more

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Q4. 3. Difference between Impairment and Depreciation?

Ans.

Impairment is a sudden decrease in the value of an asset, while depreciation is a gradual decrease in the value of an asset over time.

  • Impairment is usually caused by external factors such as economic downturns or changes in market conditions.

  • Depreciation is a result of wear and tear, obsolescence, or the passage of time.

  • Impairment is recognized as a loss on the income statement, while depreciation is recognized as an expense.

  • Impairment is usually a one-time event, while depre...read more

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Q5. 2. What is Minority Interest?

Ans.

Minority interest refers to the portion of a subsidiary's net income or losses that is not owned by the parent company.

  • It is the ownership stake in a company that is less than 50%

  • It is reported on the balance sheet as a liability

  • It is calculated by multiplying the subsidiary's net income or loss by the percentage of ownership held by the minority shareholder

  • It is also known as non-controlling interest (NCI)

  • Example: If a parent company owns 80% of a subsidiary and the remainin...read more

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Q6. 5. What is share Repurchase?

Ans.

Share repurchase is a process of buying back company's own shares from the market.

  • Share repurchase is also known as stock buyback.

  • It is a way for companies to return value to shareholders.

  • It can be done through open market purchases or tender offers.

  • Share repurchase reduces the number of outstanding shares, increasing earnings per share.

  • It can also be used to prevent hostile takeovers.

  • Example: Apple repurchased $75 billion worth of its own shares in 2018.

  • Example: Coca-Cola ha...read more

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Q7. 10. What is restricted Cash?

Ans.

Restricted cash is cash that is set aside for a specific purpose and cannot be used for other expenses.

  • Restricted cash is typically held in a separate account or in a separate section of the general ledger.

  • It is often used to ensure that funds are available for a specific purpose, such as a legal settlement or a capital expenditure.

  • Examples of restricted cash include security deposits, escrow accounts, and funds held in trust.

  • Restricted cash is reported separately on the bala...read more

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Q8. 9. What is normalised profit?

Ans.

Normalised profit is the adjusted profit of a company, excluding one-time or non-recurring items.

  • Normalised profit is used to provide a more accurate picture of a company's ongoing profitability.

  • It excludes one-time gains or losses, such as the sale of assets or restructuring costs.

  • Normalised profit is calculated by adjusting the reported profit for these one-time items.

  • It is useful for comparing the profitability of a company over time or against its peers.

  • For example, if a ...read more

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Q9. 6. PE ratio?

Ans.

PE ratio is a financial metric used to evaluate the relative value of a company's stock.

  • PE ratio is calculated by dividing the market price per share by the earnings per share (EPS)

  • It helps investors determine if a stock is overvalued or undervalued

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

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

  • For example, a technology c...read more

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