Top 35 Corporate Finance Interview Questions and Answers

The interviewer wants to test your understanding of interest accumulation over time.

Sample Answer:

Compounding refers to the process of earning interest on both the initial principal and the accumulated interest from previous periods. It's a key concept in finance that shows how investments grow over time and is widely used in time value of money calculations.

The interviewer wants to check your knowledge of present value concepts.

Sample Answer:

Discounting is the process of determining the present value of a future amount. It reflects the idea that a specific amount of money today is worth more than the same amount in the future due to its earning potential.

The interviewer wants to assess your understanding of business combinations.

Sample Answer:

A merger occurs when two companies combine to form one entity, often to increase market share or reduce competition. For example, the merger between Disney and 21st Century Fox helped Disney expand its media assets significantly.

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The interviewer will test your understanding of a core financial principle with this tricky question.  

Sample Answer:

The Time Value of Money (TVM) is the concept that money available today is worth more than the same amount in the future due to its potential earning capacity. It underpins concepts like discounting and compounding.

This question is to check your knowledge of how companies finance their operations.

Sample Answer:

Capital structure refers to how a company finances its operations and growth through different sources of funds, primarily debt and equity. A balanced structure aims to minimise the cost of capital and optimise financial performance.

This question helps the interviewer gauge your personal interests and passion for the field.

Sample Answer:

“I enjoy the strategic side of Corporate Finance as I’m able to analyse data and guide decisions that directly affect the company's future. Whether it’s budgeting, forecasting, or evaluating investment opportunities, I love the impact it has.”

This question is also to assess your understanding of how cash flows are reported.

Sample Answer:

The three main sections are operating activities, investing activities, and financing activities. Operating covers core business activities, investing shows cash used in or generated from investments, and financing reflects capital raising or repayment actions.

The interviewer wants to ensure you know the broader objectives of finance.

Sample Answer:

The primary goals of financial management include maximising shareholder wealth, ensuring financial stability, maintaining liquidity, and managing risk efficiently. These goals drive decision-making and long-term strategy.

An understanding on trade credit is to evaluate your understanding of short-term financing.

Sample Answer:

Trade credit is a short-term credit extended by suppliers to buyers, allowing them to purchase goods or services now and pay later. It’s a common and cost-effective way for companies to manage cash flow.

The interviewer is checking your ability to differentiate cash flow activities.

Sample Answer:

Cash flow from investing includes cash used in or generated from the purchase and sale of assets like property, equipment, or securities. It indicates how much a company is investing in its long-term operations.

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The interviewer is testing your understanding of fundamental accounting principles.

Sample Answer:

The balance sheet balances because of the basic accounting equation: Assets = Liabilities + Equity. This reflects that all company resources (assets) are funded either by borrowing (liabilities) or owner's investment (equity), ensuring both sides always match.

The interviewer wants to assess your knowledge of capital structure decisions.

Sample Answer:

Debt financing is helpful because interest payments can reduce your taxes. It also lets you raise money without giving up ownership in the company. Plus, it's usually faster to get than equity funding. But it needs to be handled wisely to avoid taking on too much financial risk.

The interviewer is testing your grasp of basic investment evaluation techniques.

Sample Answer:

The payback period is the time it takes for an investment to recover its initial cost from the cash inflows it generates. While it’s simple to calculate, it doesn’t account for the time value of money.

The interviewer wants to assess your understanding of valuation metrics.

Sample Answer:

The Price Earnings (P/E) Ratio is found by dividing a company’s share price by its earnings per share (EPS). It shows how much investors are willing to pay for each dollar the company earns and is commonly used to judge a stock’s value.

The interviewer wants to know if you're familiar with market risk analysis.

Sample Answer:

Beta measures a stock’s volatility compared to the market. A beta greater than 1 means the stock is more volatile than the market; less than 1 means it's more stable. It helps investors understand systematic risk.

The interviewer is evaluating your knowledge of derivative instruments.

Sample Answer:

Futures are standardised contracts traded on exchanges with daily settlements, while forwards are private, customisable agreements between parties without exchange involvement. Futures have less counterparty risk due to regulatory oversight.

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The interviewer wants practical knowledge of financing tools for daily operations.

Sample Answer:

The candidate explains that companies commonly use trade credit, short-term bank loans, and overdraft facilities. These options help manage working capital needs, handle emergencies, and maintain operational continuity without long-term debt commitments.

The interviewer is testing your ability to evaluate a firm’s cost of capital.

Sample Answer:

Weighted Average Cost of Capital (WACC) is the average rate a company expects to pay for its financing, weighted by the proportion of each source (debt and equity). It includes the cost of equity, cost of debt, and tax impact on debt.

The interviewer wants to check your ability to assess investment value.

Sample Answer:

Discounted Cash Flow (DCF ) is a valuation method that estimates the value of an investment based on its expected future cash flows, discounted to present value. It’s widely used in financial modelling and capital budgeting.

This question explores your suitability for team-based and strategic roles in finance.

Sample Answer:

“I believe strong communication, decision-making under pressure, and the ability to inspire trust are key to leading effectively. In finance, leadership also means being analytical, ethical, and always focused on long-term value creation.”

The interviewer wants to assess your understanding of inventory and its impact on financial statements.

Sample Answer:

Purchasing inventory increases current assets on the balance sheet but does not immediately affect the income statement. The expense is only recorded as Cost of Goods Sold (COGS) when the inventory is sold.

The interviewer is checking your understanding of long-term tax strategy.

Sample Answer:

A deferred tax liability allows a company to postpone tax payments, improving short-term cash flow. It often results from temporary differences between accounting and tax treatments and can be strategically beneficial for capital planning.

The interviewer is testing your knowledge of transaction impacts on financial statements.

Sample Answer:

When a company purchases an asset, its fixed assets increase while either cash (or liabilities, if financed) decreases. There’s no immediate effect on equity, but the asset will depreciate over time, impacting net income.

This question checks your understanding of the role’s demands and your self-awareness.

Sample Answer:

The candidate believes key qualities include analytical thinking, strong attention to detail, communication skills, business acumen, and integrity. These enable finance professionals to interpret data, manage risks, and support strategic decisions effectively.

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The interviewer is evaluating collaboration and strategic planning skills.

Sample Answer:

“I meet regularly with department heads to understand their objectives and align them with the company’s financial plans. I provide data-driven insights to help set realistic targets, forecast budgets, and track progress towards goals.”

The interviewer wants to assess your understanding of employee compensation and financial instruments.

Sample Answer:

Stock options give employees the right to buy company shares at a fixed price in the future. They’re often used to incentivise performance and align employees' interests with shareholders.

The interviewer is checking your knowledge of equity restructuring.

Sample Answer:

A stock split increases the number of shares while reducing the share price, keeping overall value the same. A stock dividend distributes additional shares to existing shareholders instead of cash, increasing total shares held.

The interviewer is testing your grasp of investment analysis.

Sample Answer:

IRR is the discount rate that makes the net present value (NPV) of all future cash flows from a project equal to zero. It helps compare the profitability of investments and is widely used in capital budgeting.

The interviewer is looking for your knowledge of financial formulas.

Sample Answer:

The candidate correctly states that the Internal Rate of Return (IRR) is the method used to calculate the discount rate that sets a project’s NPV to zero, helping investors evaluate project returns.

The interviewer wants to assess your knowledge of structured finance products.

Sample Answer:

A securitised bond is backed by a pool of financial assets, such as mortgages or loans, that generate income. These are bundled and sold to investors, providing returns from the cash flow of the underlying assets.

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The interviewer wants to check your understanding of tax accounting.

Sample Answer:

A Deferred Tax Liability arises when taxable income is lower than accounting income due to temporary differences. It’s created when tax laws allow companies to defer taxes, for example, using accelerated depreciation for tax purposes.

The interviewer is testing your knowledge of financial institutions.

Sample Answer:

Commercial banks focus on deposits, savings, and personal/business loans. Investment banks deal with underwriting, M&A, and trading services. While commercial banks serve individuals and small businesses, investment banks work with large corporations and investors.

The interviewer wants to assess your knowledge of derivative instruments.

Sample Answer:

An option is a contract that gives the holder the right, but not the obligation, to buy (call) or sell (put) an asset at a set price before a specific date. The two main types are Call Options and Put Options.

The interviewer wants to test your understanding of company profitability metrics.

Sample Answer:

Earnings Per Share (EPS) shows how much profit is attributed to each share of common stock. The formula is:

EPS = (Net Income – Preferred Dividends) / Weighted Average Shares Outstanding

The interviewer is assessing your awareness of non-physical company assets.

Sample Answer:

The candidate lists common intangible assets including:

a) Brand value

b) Patents

c) Trademarks

d) Copyrights

e) Goodwill

These assets often provide long-term competitive advantages and significant market value.