CORPORATE FINANCE QUESTIONS ASKED IN A INTERVIEW

If you want to ace your finance interview, then make sure you master the answers to these challenging questions below.  This guide is perfect for anyone interviewing for a financial analyst job and it’s based on real questions asked at global investment banks to make hiring decisions. Preparing for a Corporate Finance Interview? This list contains the top 4 corporate finance interview questions that are most frequently asked by employers.www.iibmindia.in

What is EPS and how is it calculated?

Ans. EPS is Earnings per Share of the company. This is calculated for the common stockholders of the company. As the name suggests, it is the per share earnings of the company. It acts as an indicator of profitability. Calculation:

EPS = (Net Income – Preferred Dividends) / weighted average number of shares outstanding during the year.

What is a difference between Futures Contract and Forwards Contract?

Ans. A futures contract is a standardized contract which means that the buyer or seller of the contract can buy or sell in lot sizes which are already specified by the exchange and is traded through exchanges. Future markets have clearing houses which manage the market and therefore, there is no counterparty risk.

Forwards Contract is a customizable contract which means that the buyer or seller can buy or sell any amount of contract they wish to. These contracts are OTC (over the counter) contracts i.e. no exchange is required for trading. These contracts do not have a clearinghouse and therefore, the buyer or the seller of the contract is exposed to the counterparty risk.www.iibmindia.in

What are the different types of Bonds?

Ans. A bond is a fixed income security which has a coupon payment attached to it which is paid by the bond issuer annually or as per the conditions set at the time of issuance. These are the types of bonds:

  • Corporate Bond, which is issued by the corporations.
  • Supra-National Bond is issued by super-national entities like IMF and World Bank.
  • Sovereign National Bond is a bond issued by the government of the country

What are the most common multiples used in valuation?

Ans.There are few common multiples which are frequently used in valuation –

EV/Sales

EV/EBITDA

EV/EBIT

PE Ratio

PEG Ratio

P/CF Ratio

P/BV Ratio

EV/Assets