Landing a job as a financial analyst is a fairly common career goal for those who aspire to work in the financial services sector. Financial analysts scrutinize the economy, as well as individual industries and companies, to help make investment decisions for banks, insurance companies, investment firms, and corporations.
If you land an interview for a financial analyst position, you will need to demonstrate your understanding of basic financial analysis and skill evaluating economic conditions and companies. The interview is also likely to include some technical questions.
Here are three common questions you might hear if you are interviewing for a financial analyst position.
Question 1: What programs would you use to prepare illustrated technical reports with graphs, spreadsheets, or charts?
The key to providing a good answer to this question is not mentioning a specific program, but rather explaining why you would choose one program over another, while also noting your willingness and ability to use any program the company prefers.
Therefore, you could respond by saying you prefer using Microsoft Excel because it allows you to present a wide variety of statistical and analytical reference points. Alternately, you could answer that you prefer a program such as Stimulsoft Reports.Ultimate because you feel it offers superior visual representations of charts or graphs and can be helpful in illustrating points to people less familiar with financial analysis.
Whatever your answer, be sure to add that you are confident in your ability to quickly master any program the company prefers and are capable of using multiple programs for preparing different types of reports.
Question 2: Explain financial modeling
Financial modeling is a big part of a financial analyst's job, so it is likely some question about the subject will be asked in an interview.
You should be able to give a succinct answer to the question, such as, "Financial modeling is a quantitative analysis commonly used for either asset pricing or general corporate finance. Essentially, hypothetical variables are used in a formula to determine the likely impact on market behavior, profitability, or economic conditions."
It is also a good idea to supplement your answer with an example. For instance, you could explain how financial modeling might be used to determine the effect rising crude prices could have on jet fuel costs for an airline.
Question 3: What do you think is the single best metric for analyzing a company's stock?
This is another question with no "right" answer, but you should be able to point to a specific metric and explain your reasoning.
For example, you could answer by saying that the first metric you look at when evaluating a company is its operating profit margin, and you prefer this metric because it provides not only an indication of basic profitability but of how well-managed the company is overall. Alternately, you could say the price/earnings to growth ratio (PEG) is the most complete equity valuation metric because it factors in the projected earnings growth rate, making it superior to the commonly used price/earnings ratio (P/E).
The most important part of answering this question lies in explaining the strength of whatever metric you prefer. It's also a good idea to note that it is unlikely any single metric is enough to make a judgment about a company as an investment. So be sure to tell the interviewer that you prefer to examine companies from many perspectives.