Financial Reporting and Analysis

Financial reporting is the disclosure of financial results and related information to management and external stakeholders. As a financial reporting professional you need to perform all these tasks. You should be prepared for the upcoming opportunities, so we have listed some frequently asked interview question which you can check and keep yourself updated.

Q.1 What is ‘financial modelling’?

It is a quantitative analysis commonly used for either asset pricing or general corporate finance.

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Q.2 Can you walk us through a ‘cash flow statement’?

Yes, lets start with the net income and go line by line explaining all major adjustments to arrive at cash flow from operating activities. Here try to mention all the necessary parts that are associated with it.

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Q.3 Is there a possibility for a company to have positive cash flow but still be in serious financial trouble?

Yes. There are two examples to understand this:
A company will show positive cash flow for a while even though it is in trouble that is selling off inventory but delaying payables.
A company has strong revenues for the period but the future forecasts show something else.

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Q.4 What is a ‘working capital’?

It's the best defined as current assets minus current liabilities.

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Q.5 Share some of your knowledge regarding the quarterly forecasting and expense models?

The analysis of expenses and revenue which is predicted to be produced or incurred in future is known as quarterly forecasting.
On a particular type of work order an expense model tells what expense categories are allowed.

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Q.6 What difference do a journal and a ledger hold?

The journal is a book which records all the financial transactions for the first time. While, the ledger is one which has particular accounts taken from the original journal.

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Q.7 Give at least one difference between a p&l statement and a balance sheet?

The financial position of a company is summarised for a specific point in time in a balance sheet. The P&L i.e. profit and loss statement shows revenues and expenses during a set period of time.

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Q.8 What is ‘cost accountancy’?

It's the application of costing and cost accounting principles, methods and techniques to the science, the ascertainment of profitability and art and practice of cost control as well as the presentation of information for the purpose of managerial decision making.

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Q.9 Do you know what is npv? where is it used?

Net Present Value is abbreviated as NPV, it is the difference between the present value of cash inflows and the present value of cash outflows. In capital budgeting to analyse the profitability of a projected investment or project NPV is used.

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Q.10 How many financial statements are there? can you name them all?

If we calculate then there are four main financial statements:
balance sheets,
income statements,
cash flow statements,
statements of shareholders’ equity.

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Q.11 What are ‘adjustment entries’?

They are accounting journal entries that convert a company’s accounting records to the accrual basis of accounting.

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Q.12 Do you follow the stock market? which stocks in particular?

You need to be cauticious while answering this question.
Being a financial analyst, following the stock market proves to be beneficial. Also, always be up-to-date with the stocks.

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Q.13 What is a ‘composite cost of capital’?

Also known as the weighted average cost of capital abbreviated as WACC, a composite cost of capital is a company’s cost to borrow money given the proportional amounts of each type of debt and equity a company has taken on.
WACC= Wd (cost of debt) + Ws (cost of stock/RE) + Wp (cost of pf. Stock)

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Q.14 What is a ‘capital structure’?

A firm finances its overall operations and growth by using different sources of funds, this whole thing is known as the Capital structure.

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Q.15 What is a ‘goodwill’?

It is an asset that captures excess of the purchase price over fair market value of an acquired business.

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