Finance interview questions and answers for freshers

General finance interview questions 

Tell me about yourself

Which quality makes you fit for the financial analyst job?

 Why did you think of doing an MBA?

 Where do you see 5 years from now?

 What are the GDP, growth rate, and inflation rate of the country?

Define Fair Market Value(FMV

 Who is the head of Niti Ayog? 

 Who is the RBI governor?

Differentiate between primary market and secondary market.

How will you handle negativity?

What if you have a conflict with a senior or colleague?

Difference between GDP and GNP

The current rate of USD

What is the current account deficit?

The questions below cover the basic finance concepts that candidates must be aware of. 

1. What do you like about ‘Finance'?

Finance interests me for the following reasons:

It gives an insight into the workings of all the aspects of an enterprise

I am comfortable working with numbers and am good at Excel.

It will enable me to be a part of the major decision-making process of the enterprise such as distribution of profits, financing of capital requirements, effective working capital management, evaluation of performance, and identifying areas of concern and improvements, etc.

2. What does the inventory turnover ratio shows?

The inventory turnover ratio is an efficiency ratio that shows how effectively inventory is managed by comparing cost of goods sold with average inventory for a period.

3. What is the return on equity?

Return on equity (ROE) is a ratio that provides investors with insight into how efficiently a company is managing the equity that shareholders have contributed to the company. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

Return on Equity = Net Income – Pref. dividend (if, any) / Shareholder's Equity.

4. What is the net worth of a company?

Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health.

5. What is the operating cycle/Cash conversion cycle?

The operating cycle is also known as the cash conversion cycle. In the context of a manufacturer, the operating cycle has been described as the amount of time that it takes for a manufacturer's cash to be converted into products plus the time it takes for those products to be sold and turned back into cash.

6. What is the difference between EBIT and EBIDTA?

EBIT represents the approximate amount of operating income generated by a business, while EBITDA roughly represents the cash flow generated by the operations of a business.

7. Distinguish between Budgeting and Forecasting.

Budgeting frames an outline that determines the direction in which the business should go.

Forecasting predicts how the business will perform, determining whether a business will achieve its budget targets or not.

Budgeting doesn't take place very often.

Forecasting is more regular than budgeting. It is often updated once a month or every quarter.

Budgets take into account the vision of the business.

Forecasts take into account the business plans mostly in the short term. 

Budgets can be used to take steps towards changing the strategy so that the business can achieve the budget goals that have been set.

Accurate forecasting reduces uncertainty and helps to take immediate actions and make critical changes. 

Budgeting doesn’t take into account the actual market conditions, which is why not every business needs to have a budget.

Forecasting takes actual market conditions into account. Every business should forecast because it is closer to reality, and it can serve as a roadmap for your business.

Budgets include many aspects of the business and are mostly very detailed.

Forecasts are not as detailed as budgets and can be considered as general overviews.  

8. What are SENSEX and NIFTY?

SENSEX:Sensex, also called the BSE 30, is a stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange (BSE)The base year of Sensex is 1978-79 and the base value is 100.
The NIFTY 50 index is the National Stock Exchange of India’s benchmark stock market index for the Indian equity market. Nifty is owned and managed by India Index Services and Products (IISL).

The base year is taken as 1995 and the base value is set to 1000.

What is options trading?

Options are a type of derivative security. They are a derivative because the price of an option is intrinsically linked to the price of something else. Specifically, options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. The right to buy is called a call option and the right to sell is a put option.

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