Technical Finance Interview Questions
and Answers | Latest Version |
2025/2026 | Correct & Verified
What is finance in simple terms?
✔✔ The management of money, investments, and financial resources
What are the three main financial statements?
✔✔ Income statement, balance sheet, and cash flow statement
What does an income statement show?
✔✔ A company’s profitability over a specific period
What does a balance sheet represent?
✔✔ A snapshot of assets, liabilities, and equity at a point in time
What does the cash flow statement track?
✔✔ Cash inflows and outflows from operating, investing, and financing activities
What is revenue?
✔✔ Income generated from normal business activities
What is profit?
1
,✔✔ Revenue minus expenses
What is gross profit?
✔✔ Revenue minus cost of goods sold
What is operating profit?
✔✔ Profit after operating expenses but before interest and tax
What is net profit?
✔✔ Profit after all expenses, interest, and taxes
What is depreciation?
✔✔ Allocation of an asset’s cost over its useful life
Why is depreciation added back in cash flow?
✔✔ Because it is a non-cash expense
What is amortisation?
✔✔ Depreciation of intangible assets
What is working capital?
✔✔ Current assets minus current liabilities
2
,Why is working capital important?
✔✔ It shows short-term liquidity and operational efficiency
What is liquidity?
✔✔ The ability to meet short-term obligations
What is solvency?
✔✔ The ability to meet long-term obligations
What is the current ratio?
✔✔ Current assets divided by current liabilities
What does a current ratio below 1 indicate?
✔✔ Potential short-term liquidity problems
What is the quick ratio?
✔✔ (Current assets minus inventory) divided by current liabilities
What is equity?
✔✔ The residual interest in assets after liabilities
3
, What is retained earnings?
✔✔ Accumulated profits reinvested in the business
What is capital expenditure (CapEx)?
✔✔ Spending on long-term assets
What is operating expenditure (OpEx)?
✔✔ Day-to-day running costs of the business
What is EBITDA?
✔✔ Earnings before interest, tax, depreciation, and amortisation
Why is EBITDA used?
✔✔ To compare operating performance across companies
What is free cash flow?
✔✔ Cash from operations minus capital expenditures
What is valuation?
✔✔ The process of determining a company’s worth
What is discounted cash flow (DCF)?
4
and Answers | Latest Version |
2025/2026 | Correct & Verified
What is finance in simple terms?
✔✔ The management of money, investments, and financial resources
What are the three main financial statements?
✔✔ Income statement, balance sheet, and cash flow statement
What does an income statement show?
✔✔ A company’s profitability over a specific period
What does a balance sheet represent?
✔✔ A snapshot of assets, liabilities, and equity at a point in time
What does the cash flow statement track?
✔✔ Cash inflows and outflows from operating, investing, and financing activities
What is revenue?
✔✔ Income generated from normal business activities
What is profit?
1
,✔✔ Revenue minus expenses
What is gross profit?
✔✔ Revenue minus cost of goods sold
What is operating profit?
✔✔ Profit after operating expenses but before interest and tax
What is net profit?
✔✔ Profit after all expenses, interest, and taxes
What is depreciation?
✔✔ Allocation of an asset’s cost over its useful life
Why is depreciation added back in cash flow?
✔✔ Because it is a non-cash expense
What is amortisation?
✔✔ Depreciation of intangible assets
What is working capital?
✔✔ Current assets minus current liabilities
2
,Why is working capital important?
✔✔ It shows short-term liquidity and operational efficiency
What is liquidity?
✔✔ The ability to meet short-term obligations
What is solvency?
✔✔ The ability to meet long-term obligations
What is the current ratio?
✔✔ Current assets divided by current liabilities
What does a current ratio below 1 indicate?
✔✔ Potential short-term liquidity problems
What is the quick ratio?
✔✔ (Current assets minus inventory) divided by current liabilities
What is equity?
✔✔ The residual interest in assets after liabilities
3
, What is retained earnings?
✔✔ Accumulated profits reinvested in the business
What is capital expenditure (CapEx)?
✔✔ Spending on long-term assets
What is operating expenditure (OpEx)?
✔✔ Day-to-day running costs of the business
What is EBITDA?
✔✔ Earnings before interest, tax, depreciation, and amortisation
Why is EBITDA used?
✔✔ To compare operating performance across companies
What is free cash flow?
✔✔ Cash from operations minus capital expenditures
What is valuation?
✔✔ The process of determining a company’s worth
What is discounted cash flow (DCF)?
4
