1. Walk me through a cash flow statement?

2. What is working capital?

3. Is it possible for a company to show positive cash flows but be in grave trouble?
4. How is it possible for a company to show positive net income but go bankrupt?
5. I buy a piece of equipment; walk me through the impact on the 3 financial statements?
6. Why are increases in accounts receivable a cash reduction on the cash flow statement?
7. How is the income statement linked to the balance sheet?
8. What is goodwill?
9. Why do capital expenditures increase assets (PP&E), while other cash outflows, like paying
salary, taxes, etc., do not create any asset, and instead instantly create an expense on the income
statement that reduces equity via retained earnings?
10. What is a deferred tax liability and why might one be created?
11. What is a deferred tax asset and why might one be created?
12. What are the various streams of accounting?
13. Explain Financial Accounting. What are its characteristic features?
14. Compare Financial Accounting and Management Accounting?
15. What is the scope of finance function? What are the goals of finance function? What is the
relation of finance function to other functions of a business enterprise?
16. Compare Cost Accounting and Management Accounting?
17. Explain the following:
a. Business Entity Concept
b. Dual Aspect Concept
c. Going Concern Concept
d. Accounting Period Concept
e. Cost Concept
f. Money Measurement Concept
g. Marketing Concept.
18. What are capital expenditures? Is it Ok to consider these expenditures while calculating the
profitability of during a certain period? Explain your answer.
19. Explain deferred expenditures. How are these expenses dealt with in profitability statement?
20. Explain Real Accounts. List different accounts consisting real accounts in practical circumstances?
21. What is the principal of Double Entry system of accounting? What are the advantages of Double
Entry system of accounting?
22. What is depreciation? What are the causes of depreciation? Is it a cost? Why?
What is the need of depreciation account?
23. What is the effect of depreciation of assets on profits received by owners?
24. Explain Bank Reconciliation Statement. Why is it prepared?
25. What are the reasons which cause pass book of the bank and your bank book not tally?
26. What does capital market mean? How does the company raise funds in capital market?
27. What "rights issue" do the shareholders of a company have under Companies Act, 1956?
28. What are the eligibility criteria for an unlisted company to make public issue?
29. Explain Revenue Expenditure. Does it affect the profitability statement in a period?
30. List various methods for calculating depreciation.
31. What do you think is going to happen with interest rates over the next six months?
32. How do you stay on top of the markets?
33. Where and what is the Dow? Where are the 1-year, 5-year, and 10-year Treasury? What is the
price of gold? Where is the S&P 500? Where is the US trade deficit?
34. What is unique about the U.S. treasury market vs. the rest of the debt market?
35. Tell me three major investment banking industry trends and describe them briefly
36. What is a hedge fund?
37. What has the market been doing? Why? What do you think the market will do in coming 12
months?
38. Tell me about some stocks you follow. Should I buy any of them?
39. Do you understand various valuation methods and procedures (discounted cash flow techniques,
WACC, free cash flow, comparable analysis, and sensitivity analysis, etc.)?
40. Why Corporate Finance or M&A (or both if applicable)?
41. Let’s say retail sales figures just came out, and they were far below what economists were
expecting. What will this do to stock prices and the strength of the currency?
42. How do you value a bond?
43. How would you value a stock or a company?
44. What does liquidity allow an investor?
45. If you worked for the finance division of our company, how would you decide whether or not to
invest in a project?
46. How does the yield curve work? What does it mean when it is upward sloping?
47. Tell me how you would go about valuing a privately held construction company?
48. Why might a technology company be more highly valued in the market in terms of P/E than a
steel company stock?
49. When should a company raise money via equity? When should a company raise funds using
debt?
50. How would one price the different elements of a convertible bond?
51. What is operating leverage?
52. Your client wants to buy one of two banks. One is trading at a 12x P/E, and the other trades at a
16x P/E. Which should your client try to buy? Do you even have enough information to
determine this?
53. What are some ways to determine if a company might be a credit risk?
54. How does compounding work? Would I be better off with 10% annually, semi-annually, or daily?
55. What would happen to a company’s stock if it announced a large loss due to a write-down of
goodwill?
56. What’s deferred tax?
57. What is securitization?
58. How do you calculate market capitalization of a company?
59. How do you calculate the market value of a firm?
60. What is the breakup value of a firm?
61. How can a company raise its stock price?
62. What are some reasons companies carry out mergers?
63. What is an acquisition? What are some of the defensive tactics that a target firm may employ to
block a hostile takeover?
64. Who is Janet Yellen and why is he followed so closely by the press? How will the stock market be
affected if he announces an increase in interest rates?
65. Why is a firm’s credit rating important?
66. Why would a firm choose short-term over long-term debt?
67. If a firm needs to raise cash by issuing a bond, but is worried about the fact that interest rates
may drop in the future, what strategy should it employ?
68. What is a leveraged buyout (LBO)? Why lever-up?
69. How would you value a company with no earnings, such as a start-up?
70. Your boss uses the discounted free cash flow model to value high growth stocks with low
earnings. What do you think of this strategy?
71. Why might high-tech stocks have high prices even though they have little or no earnings?
72. How do you calculate a discount rate?
73. What is beta?
74. How do you calculate an equity beta?
75. Is beta constant or does it vary over time?
76. What do you think the beta of General Motors is? What about a high-tech stock, such as Cisco
Systems?
77. What is the weighted average cost of capital and how do you calculate it? Why is it important?
78. How would you calculate WACC for a private company?
79. Why would a firm try to optimize its capital structure?
80. Tell me what an institutional investor is.
81. Does the price of an option go up or down when interest rates rise?
82. What is a spot rate? What is a forward rate?
83. Do forward rates predict the rates that ultimately prevail in later periods?
84. Why are yields on corporate bonds higher than treasury bonds of the same maturity?
85. Does treasury stock receive dividends? Is it included in market capitalization of a company?
What happens to a company’s ROE if shares are repurchased?
86. What is LIBOR? Why is it important?
87. What do you think about index funds? Do you subscribe to the “Random Walk” theory?
88. Stocks historically outperform bonds over the long term. If I am a long-term investor, I don’t
need any bonds in my portfolio. True or false?
89. What kinds of things make a stock extremely volatile in the short term?
90. How do you calculate the return on a stock?
91. What is put-call parity? How is it used?
92. What is a warrant? Do warrants affect a firm’s financial ratios such as ROE?
93. What would be a good instrument to use to hedge a portfolio of preferred stock?
94. If you are buying corporate bonds, which are more speculative: A, Aa, Baa or B?
95. Suppose you have an investment earning 1% per month. How do you convert this to an annual
rate?
96. What factors influence the price of a bond?
97. What are the factors affecting refinancing and prepayments of mortgages?
98. How a project is evaluated when it has multiple IRR’s?
99. When the situation would arise where a project will have only negative IRR’s?

100. Can software be financed through a lease agreement?