Arizona State University

• FIN 300

• Table of Contents Introduction...............................................................................................................................................................................7 Technical Section Introduction .....................................................................................................................................................................8 Accounting Questions..........................................................................................................................................................12 Financial Statements & Accrual Concepts .............................................................................................................................................13 Financial Statement Analysis ......................................................................................................................................................................27 Advanced Accounting .....................................................................................................................................................................................35 Valuation Questions .............................................................................................................................................................44 Corporate Finance Theory............................................................................................................................................................................45 Intrinsic Valuation............................................................................................................................................................................................54 Relative Valuation.............................................................................................................................................................................................64 Mergers & Acquisitions Questions..................................................................................................................................71 M&A Concepts....................................................................................................................................................................................................72 Accretion/Dilution Modeling ......................................................................................................................................................................80 Leveraged Buyout Questions.............................................................................................................................................89 Private Equity Investing ................................................................................................................................................................................90 LBO Modeling.................................................................................................................................................................................................. 103 LBO Modeling Tests...................................................................................................................................................................................... 109 Capital Markets Questions...............................................................................................................................................110 Debt & Leveraged Finance......................................................................................................................................................................... 111 Equity Financing............................................................................................................................................................................................ 121 General Market Knowledge....................................................................................................................................................................... 132 Hedge Fund Investing Strategies ............................................................................................................................................................ 139 Sales & Trading............................................................................................................................................................................................... 154 Industry Specific Questions.............................................................................................................................................164 Industry Specific Section Introduction................................................................................................................................................ 165 Technology, Media & Telecommunications (TMT)......................................................................................................................... 166 Software as a Service (SaaS)..................................................................................................................................................................... 181 Financial Institutions Groups (FIG)....................................................................................................................................................... 190 Healthcare ........................................................................................................................................................................................................ 203 Consumer Products & Retail .................................................................................................................................................................... 216 Financial Restructuring .............................................................................................................................................................................. 226 Real Estate (REIT)......................................................................................................................................................................................... 240 Real Estate Private Equity (REPE)......................................................................................................................................................... 243 Industrials ........................................................................................................................................................................................................ 245 Oil & Gas (O&G).............................................................................................................................................................................................. 256 Behavioral Questions.........................................................................................................................................................259 Behavioral Section Introduction............................................................................................................................................................. 260 Behavioral Interview Advice .................................................................................................................................................................... 262 Personal Background Questions............................................................................................................................................................. 266 Firm Specific Questions .............................................................................................................................................................................. 273 Past Experiences & Situational Questions.......................................................................................................................................... 277 Elevator Test Questions .............................................................................................................................................................................. 281 7 ACCOUNTING QUESTIONS Introduction 8 INTRODUCTION TECHNICAL SECTION INTRODUCTION Dear Reader, This interview guide was designed with a single goal in mind: To give you the tools to land a job in investment banking and other related financial services sectors. There is much material to cover in this guide, so let’s just dive right in. For virtually every technical interview question, there are some general principles to govern your approach: Keep Answers Concise One of the most frequently asked interview questions for investment banking is, “How do you value a company?” I could easily take an hour to explain how to value a company and I would barely scratch the surface. That's not what we're going for in an interview. When asked an expansive technical question where you're unsure about the appropriate level of detail, it's reasonable to finish a succinct answer with, “Would you like a little more detail on any of this?” However, while most candidates struggle with keeping answers brief, others have the opposite problem of not giving sufficient details. As a rough guideline for questions without clear numerical or concrete answers, the answers should last at least 1 minute. This shows the interviewer you're actually taking the time to think and come up with thoughtful responses. For example, answering the question, “Walk me through the cash flow statement,” by saying, “You start with net income, and then make non-cash adjustments to net income to arrive at cash for the year” would not be enough to show your understanding. Avoid Rambling into Tangents The longer your response goes on, the risk of being asked to elaborate on a topic you don't fully understand increases in tandem. That being said, don't extend beyond your comfort zone and keep answers short to avoid giving the interviewer extra reasons to probe deeper. Upon responding to a question, a momentary pause from the interviewer is normal, so don't misconstrue it as meaning that further explanation is required on your end. To be able to wait patiently after giving your initial answer shows that you recognized the concept the interviewer was testing for, and have confidence that an adequate response was provided.