A financial analyst researches macroeconomic and microeconomic conditions along with company fundamentals to make business, sector and industry recommendations and can recommend a course of action, such as to buy or sell a company’s stock based upon its overall current and predicted strength.

Though there are a lot of opportunities for financial analysts in the industry, the chances of getting into one of the top financial companies. IIBM Institute provides a wide array of financial analyst certification courses to help you in that direction. You can also gain advanced professional financial knowledge and skills through these courses.

Outlined below are the answers to some of the most frequently asked Financial Analyst interview questions for the position of a financial analyst:

Explain financial modelling?

Financial modeling is a big part of a financial analyst’s job, so it is likely some question about the subject will be asked in an interview.

You should be able to give a succinct answer to the question, such as, “Financial modeling is a quantitative analysis commonly used for either asset pricing or general corporate finance. Essentially, hypothetical variables are used in a formula to determine the likely impact on market behavior, profitability or economic conditions.”

It is also a good idea to supplement your answer with an example. For instance, you could explain how financial modeling might be used to determine the effect rising crude prices could have on jet fuel costs for an

Explain quarterly forecasting and expense models?

The analysis of expenses and revenue which is predicted to be produced or incurred in future is called quarterly forecasting.

An expense model tells what expense categories are allowed on a particular type of work order.

Mention one difference between a P&L statement and a balance sheet?

The balance sheet summarises the financial position of a company for a specific point in time. The P&L (profit and loss) statement shows revenues and expenses during a set period of time.

What do you think is the single best metric for analyzing a company’s stock?

This is another question with no “right” answer, but you should be able to point to a specific metric and explain your reasoning.

For example, you could answer by saying that the first metric you look at when evaluating a company is its operating profit margin, and you prefer this metric because it provides not only an indication of basic profitability, but of how well managed the company is overall. Alternately, you could say the price/earnings to growth ratio (PEG) is the most complete equity valuation metric because it factors in the projected earnings growth rate, making it superior to the commonly used price/earnings ratio (P/E).

The most important part of answering this question lies in explaining the strength of whatever metric you prefer. It’s also a good idea to note that it is unlikely any single metric is enough to make a judgment about a company as an investment. So be sure to tell the interviewer that you prefer to examine companies from many perspectives.