Financial Analyst Interview Questions and Answers
Financial analysts are also known as investment analyst or business analyst. Financial analysts have great career opportunities and they can work in both junior and senior positions in a firm. A financial analyst must be aware of current developments in the field in which he or she specializes as well as in preparing financial forecasts. They provide guidance for making investment decisions. Following are some frequently asked Financial Analyst Interview questions along with their answers. Prepare yourself with these questions before appearing for your interview.
1 Q: Tell me about yourself.
A: This question is one of the most common questions but is difficult for those who do not prepare themselves with the answer. This question also determines the next questions that will follow. Describe about your experience and your job responsibilities which relate to the job you are interviewing for. Try to build up a good impression from this question.
2 Q: Where do you see yourself in five years time?
A: The interviewer wants to know about your career goals. The interviewer is trying to determine whether you will be suitable for their company based on where you are today and where you see yourself in five years time. Your goal should align to the type of work you want to do and the salary you will earn with the position. Also mention that you see yourself in the company you are interviewing in five years time.
3 Q:. Why should we hire you?
A: Financial analyst job is not an easy job and so the interviewers want to know the reason why they should hire you and not another candidate. You need to show your motivation and enthusiasm for the job. You need to convince that you understand what matters for this job and that you can do it.
4 Q: Why have you chosen financial analyst as your career?
A: Describe your skills and abilities which made you chose financial analyst as your career. A financial analyst has to be great with numbers and should have excellent analytical skills. If you have the skills then you very well can give the answer to the question.
5 Q: What was the worst financial forecast you made in your previous jobs?
A: The interviewers always look for a financial analyst who has experience with forecasting. Be honest in your answer and say about your negative experience about bad forecast. However, you should always add the lessons you have learned from your bad forecasts. The interviewers through this question also judge whether you will give an honest reply or whether you will say that you never made mistakes. No one can be perfect and a financial analyst can also make mistakes. So you should always admit about the worst forecasts you have made.
6 Q:. What was the best financial forecast you have made so far?
A: Describe about your best financial forecast you have made in your previous jobs. Also mention the added value it brought to your employer. The interviewer will gain knowledge about the type of financial forecast you are capable for through this question.
7 Q:. Give example of a situation when you had to meet tight deadline.
A: The work of a financial analyst is very important to the company. The reports and forecasts of a financial analyst are required for making decisions. The Interviewer wants to find out whether you will be able to meet tight deadlines. Financial analyst has to be quick and efficient in his work. Describe an example of your previous job where you had to meet tight deadline. Say about what goals you achieved and how. Mention if you had to work overtime or you had to work at home also. Give the full details to the interviewer.
8 Q:. Explain the importance of ratio analysis in planning.
A: Ratio analysis is an important tool for analyzing a company’s financial performance. Ratio analysis helps the company to compare itself against other companies in the same industry. Also ratio analysis helps by comparing your company with prior periods and hence can be used to establish future trends of its financial performance. Besides, it is also important to know how well its different divisions are performing among themselves in different years. Ratio analysis facilitates such comparison.
9 Q:. What are the advantages and disadvantages of activity based costing?
A: The advantages of activity based costing are more accurate costing of products and services, utilizes unit cost rather than just total cost, supports performance management and scorecards and facilitates bench marking. The disadvantages of activity based costing are it is difficult to identify the overall activities that influence costs and difficult to evaluate cost on the basis of activities.
10 Q: Explain the concept of capital market.
A: Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks etc. Capital markets channel savings and investment between suppliers of capital such as retail investors and institutional investors, and users of capital like businesses, government and individuals. Capital markets include primary markets, where new stock and bond issues are sold to investors, and secondary markets which trade existing securities.
11 Q:. What was the biggest mistake you made in your previous job?
A: Financial analyst is a position where a mistake can prove extremely costly. So, financial analysts have to work hard to avoid making mistakes. Through this question the interviewer wants to find out whether you are honest and whether you have learned from the mistakes. It will not be true if you say that you never committed any mistake. You need to give example from your previous job and also recommend the solution for it or what you have learn from the mistake. Also, add that you will work very hard to avoid making mistakes and mention the ways you will ensure that you don’t make mistakes.