Browse Our Resources For Acing Your Next Interview
Investment banking interviews are often very technical, testing you on financial concepts not taught in the classroom. The Finance Interview Coach Resources page was created to offer candidates with additional resources to assist in preparing for their interview.
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Why do changes in inventory affect the income statement?
Ending Inventory = Beginning Inventory + Purchases – Cost of Goods Sold (COGS) Purchases do not affect the income statement, since they represent purchases of unsold inventory which have not been delivered to the customer. However, COGS does show up on the income statement, since it represents inventory that has been sold and delivered to […]
What is the risk-free rate?
The risk-free rate is the rate at which governments can borrow, since governments in developed markets are relatively unlikely to default given their ability to raise taxes. In the US, the risk-free rate is the 10 year treasury bond. In Canada, it is the prime-rate of the 10 year government bond,
If a company is growing, has positive EBITDA margins, and growing customer base, how could it post a loss?
Even if a company is growing and has positive EBITDA margins, it is possible that the expenses beneath EBITDA are large enough to counteract any positive EBITDA, ultimately resulting in a negative net income. Expense items beneath EBITDA include: depreciation and amortization, interest, and tax. These expense items, when combined with EBITDA, could be enough […]
What are some error checks you could do to make sure your LBO model is correct?
You can make sure your balance sheet balances: total assets = total liabilities + shareholder’s equity. You can also try to build a bridge from EBITDA. You can also look at the cash flow statement as well to make sure debt repayments / borrowings are linked properly to the debt schedule. If you are doing […]
Why do you REALLY want to do investment banking?
Sometimes firms will ask this same question again to dive into your real intentions, especially in superdays. Stay calm, and explain your points perhaps in a different manner, showing how you’re hungry and eager to learn and that’s what drives you. You can be more honest in this answer, but once again, focus on what […]
Walk me through how you would calculate revenue synergies.
First, we should understand the revenue model. For example, it could be a quantity x price model, subscribers x ARPU model, etc. If the revenue synergies come from increasing one of these variables in the revenue model, such as an increase in subscribers as a result of cross-selling, then we should estimate how many more […]
