Are you preparing for the financial planning and analysis (FP&A) job role? Then you should know the possible financial planning and analysis interview questions about the industry. So, it is also crucial to know about financial planning and analysis (FP&A) trends and their essential concepts. Therefore, prepare for the financial planning and analysis interview questions and present yourself professionally in front of the hiring manager.
We have clubbed financial planning and analysis interview questions based on our extensive financial planning and analysis (FP&A) research.
We have also included financial planning and analysis professional interview questions suggested by experts.
Let's take a look at some of the most relevant financial planning and analysis interview questions
The aspirant should prepare for these before sitting in an interview for the financial planning and analysis (FP&A) job role.
What are the three financial statements?
The three financial statements are the balance sheet, cash flow statement and income statement. You can elaborate on it by stating the definitions of all three. A balance sheet shows a company's assets, liabilities, and shareholder equity. Whereas an income statement shows the company's expenses and sales revenue. Finally, the cash flow statement depicts the cash flows generated by operating, investing, and financing activities over time.
What effect does an inventory write-down have on the three statements?
An inventory write-down affects the balance sheet and the income statement. A write-down is an expense that reduces net income and tax liability. A decrease in net income lessens a company's retained earnings. And, that reduces shareholder equity on the balance sheet.
Why do you want to be financial planning and analysis (FP&A) professional?
Start with talking about the skills needed for the job. For example, financial planning and analysis (FP&A) professional requires a high level of skills. These are problem-solving, good data handling, and interpreting skills. In addition, you must have a good understanding of financial analysis, modeling, and forecasting. Phrase your answer rotating around these critical skills, and you will be able to impress the hiring manager.
What is the difference between budgeting and forecasting?
Budgeting depicts the expected revenues a company wants to achieve in the future. Whereas financial forecasting estimates the income or revenue generated in the future.
What is EPS and how to calculate it?
EPS stands for Earnings per Share. It is the amount of income generated for each share of the company. The preferred dividends paid are subtracted from the total net income to calculate earnings per share. The earnings would be divided by the balance sheet's total number of outstanding shares.
What do you know about financial modeling?
It is a quantitative analysis tool that helps figure out asset pricing and assists with other general financial analyses. It helps to make future predictions based on the organisation's historical and present financial records. Financial modeling also help in business valuation, budgeting, and strategic planning.
What are the main components of a cash flow statement?
A cash flow statement helps us understand the business's cash flow position. It gives detailed information regarding the cash flowing in and out of business. Therefore the cash flow statement has three main components cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities.
What does it take to be an outstanding financial planning and analysis (FP&A) analyst?
You can discuss the skills required to become the best financial planning and analysis analyst. The three essential qualities of becoming the best financial planning and analysis professional are as follows.
- Analytic Skills: Collection and organisation of data for analysis. Therefore, recommendations also come in this, and here is the chance for financial planning and analysis (FP&A) professionals to shine.
- Art of presentation: Analysis, interpretation, and recommendations are not enough. Successful financial planning and analysis (FP&A) professionals should also present the required information well.
- Soft Skills: A world-class financial planning and analysis (FP&A) professional should have the best communication skills. This requires confidence while communicating, effectively articulating the thoughts, and being able to read the client's mindset. Added advantages are being politically sound and marketing yourself.
Give us an example where a company has positive cash flow but is not financially sound.
It can be a tricky one. However, you can state that one such instance could be a company selling off inventory but delaying the number of payables.
What essential tools do technical analysts use to analyse a company's stock?
While conducting technical analysis, analysts generally use charts. So, they typically use line charts, bar graphs, and point charts. They are required to assess the performance of a company's stock.
What do you understand by cost accountancy?
Cost accountancy is the application of cost accounting principles and guidelines. These are used to calculate the cost of production by identifying the fixed and variable costs associated with manufacturing products. Therefore it is a branch of managerial accounting that helps in the decision-making process for the business.
Final Take Away
We hope these financial planning and analysis interview questions help you crack the interview. Regular preparations and updating your knowledge is a must. In addition, reviewing your performance is significant for appearing and getting selected for the financial planning and analyst role (FP&A). You can also check out our blog, Tips For Cracking Financial Analyst Interview, for interview prep. All the best.