Financial Planning & Analysis professionals are significant additions to any organization as they offer solutions for budgeting, economic forecasting, analysis of financial metrics, and financial management. The FP&A interview process is designed to identify capable applicants with solid attention to detail and critical thinking capabilities. Answering technical or behavioral questions confidently and consistently is vital and helps convert an interview into a job offer. Below are 25 FP&A interview questions and practical sample answers that you may rehearse to prepare for your upcoming interview.
1. Why Are You Interested In An FP&A Role And Not Accounting Or Mathematics?
I am a creative person who prefers to dig deep into numbers and discover any activities or explanations behind those numbers. I find this discovery rather fascinating as opposed to simply recording financial transactions. I’ve also worked as an accountant in my previous role and would love to experience both career paths. I believe that gaining experience in accounting and FP&A will facilitate me to progress toward my dream of becoming a finance manager.
2. Please Tell Us About Yourself.
I’ve worked in the financial sector for five years with small to medium-sized financial institutions and also large conglomerates. As a result, I’ve gained invaluable working experience, which I believe will help me to excel in this role. Some of the duties I’ve handled include budgeting, forecasting, financial analysis, capital planning, communication, and collaboration in teams.
I’ve also perfected operational metric tracking skills, analyzing financial data, and creating economic models to support decision-making. I believe that my academic qualifications come in handy to help me excel in any financial planning or relatable role. If given a chance, I will utilize my vast experience to thrive in this position.
3. What Are The Three Primary Financial Statements, And Do You Have Any Experience Using Them?
Having been in the finance industry for the last three years has given me multiple opportunities to improve my skills in handling the three financial statements. These statements include:
- Balance sheet
- Statement of cash flows
- Income statement
The income statement consists of an organization’s revenue and expenditure, which comprise the net income. The balance sheet consists of an organization’s assets, liabilities, and equity, which depict the company’s financial health. Lastly, the cash flow statement begins with the income statement, which shows adjustments in capital expenditure, working capital, or debt repayment. It summarizes the company’s ending cash balance.
4. Share A Typical Day Working In The Finance Department Of A Dynamic Organization.
As a financial expert, my day begins with a meeting with my team to plan the day’s events and delegate duties to appropriate individuals. It also helps us to catch up and brief each other on the previous day’s highlights and any challenges that need other members’ intervention. Such meetings are mandatory on Mondays as we have to audit the last week’s events and plan the current and subsequent weeks. From Tuesday through to Friday, the meetings are optional or as the need arises.
After meetings, I spend significant time working on profit and loss statements, cash flows or budget projections, or other financial statements. I also confirm financial transactions and countercheck figures for abnormalities, errors, or missing information. A proper audit will help me generate forecasts and draw recommendations for the next stakeholder meeting.
Whenever time allows, I educate myself on trending financial topics to remain relevant in this fast-evolving industry. I also create time to respond to emails and complete any other pending tasks from the previous day. Before leaving the office, I always prepare a checklist of the duties I will handle the next day. I have found that planning for the future enhances my organizational skills and helps me save time and increase my productivity.
5. Between The Equity Or Enterprise Value, Which One Should You Consider When Looking At The Acquisition Of A Company?
To take over a business, an acquiring enterprise must purchase both liabilities and equity. The buyer must assess the company’s enterprise value which consists of debts and equity.
6. How Do You Share Financial Information With People Who Don’t Understand The Terminologies You Are Using?
My career in finance has given me opportunities to mentor people from all walks of life, including school-going kids. Such opportunities have helped me to learn how to explain financial terms in a language even an elementary child can understand. I’ve also learned how to prepare PowerPoint slides to demonstrate complex topics and case studies to make them practical and more relatable.
7. In Your View, When Should An Expense Reflect On An Income Statement?
An expense must be tax deductible and should have been incurred during the income statement period for it to appear on the income statement. Examples of costs arising on the income statement include salaries, advertising expenses, and so on.
8. Share A Situation Where A Company Can Have Negative Shareholders’ Equity.
Suppose a company has a protracted negative net income; in that case, that company will have a negative retained earnings balance, which may lead to a negative shareholders’ equity.
9. How Many Components Does A Cash Flow Statement Have, And What Are They?
There are three components of a statement of cash flows which include cash from operations, cash from investments, and cash from financing. Cash from operations includes money lost or generated through sales, operations, or changes in working capital. Cash from investments includes asset sales, capital expenditures, or financial investments. Money paid or raised for financing a business includes equity issuance, equity repurchase, or proceeds from debts that fall under cash from financing.
10. Considering All Factors Remain Constant, Should The Cost Of Equity Be Higher For A Company With A Smaller Or Larger Market Cap?
A smaller company is riskier and could attract a higher cost of equity because small companies are generally expected to produce greater returns than larger companies.
11. Why Do Companies Choose To Share Dividends With Shareholders?
The distribution of dividends indicates that a company is healthy and profitable. Such a healthy outlook is beneficial as it attracts investors, which is excellent as the company can realize its goals and expansion activities.
12. What Does Operating Leverage Refer To?
Operating leverage refers to the percentages of the fixed cost against the variables. A company with fixed expenses has a higher level of operating leverage. If a company has high operating power, an increase in revenue will affect profits because the incremental cost of production is low. For instance, a gym is a business with a high level of operating leverage. Its prices are relatively fixed once the establishment begins operations. With the same number of employees, equipment, and exact maintenance cost, the gym can grow from 50 to 60 members with negligible additional expenses. Almost all the fees raised from the ten new members help boost the business.
13. Consider A Scenario Where You Have Two Companies With Similar Growth Risks, Revenue Streams, And Financial Analyses. In Your View, Which Company’s Shares Would Fetch Higher Prices Considering That One Company Is Public And The Other Private?
The public company is most likely to fetch higher prices due to the transparency required for it to be listed on a public exchange. Also, the liquidity premium one must pay to sell and purchase shares faster and more efficiently in the public capital market makes the public company to fetch hire rates.
14. What Are Your Most Significant Weaknesses In Terms Of FP&A?
I am well versed in this sector and do not struggle to deliver tasks. This is why I opted for a career path in financial planning and analysis. Though I am thorough when doing my work, I struggle when operating Google Sheets as I am not that conversant with it. I am aware of this weakness and have enrolled in an online course to improve documenting my files using this program.
15. What Procedure Would You Adopt In Developing A Financial Plan For A New Product Or Service?
The first thing is to audit the company’s current financial situation and determine the requirements to comprehensively execute the plan. It is important to assess the company to decide what resources are available that can support the new project. The next step is to create a to-do list with timelines and turnaround periods for those tasks. It is also essential to delegate roles to the team members and know which skills are lacking within the team. Once all that is settled, I develop a budget based on the expenses and projected revenue from the new product or service.
16. Are You Conversant With Any Financial And Analysis Software Applications Commonly Used In This Field?
I am conversant with several FP&A software, including Excel and Vena. I began utilizing these applications during my internship at a local auditing firm, where I was responsible for creating financial reports, balancing books of accounts, and analyzing data. To excel in financial planning and analysis roles, I periodically register for online courses to increase my skills in handling new techniques in the industry.
17. Share An Example Where You Had To Present Your Findings To Your Team.
As a financial planning and analysis expert, I’ve, on numerous occasions, had to present my findings to the management team. For instance, at the end of each financial year, I always create a budget for the next financial season and highlight areas that need adjustment or improvement. Last year, I provided an overview of the company’s financial health and created financial forecasting, backing my presentation with evidence to help the company take calculated risks in planning for the future.
18. In Your View, What Are The Most Critical Skills For An FP&A Professional To Have?
I believe that any professional to excel in this industry must possess strong analytical abilities and excellent communication skills. Understanding complex financial terminology and the aptitude to analyze and interpret financial data will help anyone excel in a financial planning and analysis role. From my experience, I think problem-solving skill is critical, especially if you hold a managerial or supervisory role within the organization. Having the ability to communicate effectively with your team is also vital in ensuring they follow instructions and that workflows are well streamlined.
19. This Job Vacancy Entails Making Presentations To Shareholders To Convince Them To Invest In Projects. How Well Can You Communicate Both Verbally And In Writing?
Most of my work-related duties demand that I train new teams or share financial projections to woo investors. My success in these assignments stems from my ability to communicate effectively in writing and verbally. As an FP&A expert, I consistently hold meetings with clients, investors, and my team to streamline processes, share insights or make financial projections. To effectively do this, I must continuously work on my presentation and communication skills. Every week, I have to meet with clients to update them on the company’s financial health. I also spend most of my afternoons writing reports that outline the company’s financial performance and highlight recommendations for improvement. I believe that my excellent communication skills have helped me build healthy relationships with my colleagues, clients, and stakeholders, which will enhance me to excel in this role.
20. What Methodology Do You Integrate When Evaluating The Financial Performance Of A Company?
First, I would review the company’s cash flow, budget, income, balance sheets, and other relevant documents. I then compare the findings to industry benchmarks and equate performance with similar businesses in the same industry. For instance, in a previous role as a financial advisor, I discovered that my client’s business was spending much more on advertising than its rivals. Further research showed that their advertising strategies were outdated and not cost-effective. I recommended a change in their marketing strategy, and within three months, there was a massive improvement in their revenue streams.
21. When Did You Last Read An Industry Journal Or Financial Report?
I am a member of several finance-related groupings where we exchange knowledge and make suggestions on current affairs. These networks offer valuable information that keeps me abreast of current affairs within the industry. I commit myself to reading an industry-related magazine at least three times each week to ensure that I am well-versed with the new developments in the financial planning and analysis field. The last time I read a journal was this week on Tuesday when I was familiarizing myself with IBM planning analytics, which is an FP&A tool useful in enhancing performance.
22. Give An Overview Of What You Intend To Do During Your First Three Months On The Job If Hired.
First, I would start by learning more about the company’s financial objectives and culture. I would take the time to understand what their vision is and how their financial health supports that vision. I would also meet the team and learn more about how their expertise contributes to the company’s overall success. Once I grasp the basics, I will highlight new processes and determine the timelines for implementing these processes. I will also audit the workflows to determine if there’s a need to integrate new software or continue with existing ones. This will mainly depend on the performance of the finance department and its level of productivity.
23. What Steps Would You Take After You Notice An Anomaly In One Of The Financial Reports?
If I notice an anomaly in any financial statements, I would first determine why there’s a discrepancy and determine if any other person on the team has seen it. I would then take time to analyze each report and find out the inconsistency’s origin. I would take time to make comparisons and will not stop until I unravel where the problem originates. Suppose I discover that the problem is due to an error while submitting a previous statement. In that case, I will inform the team and request relevant individuals to take appropriate action.
24. Please Share A Project You’Ve Participated In Where You Worked On A Team
As an expert in the FP&A industry, I’ve had multiple opportunities where I’ve worked in a team to produce financial solutions for organizations. In one of my previous roles, I worked with experts to develop a long-term financial strategy for a fast-growing multinational company. The five-member team I was a part of comprised a financial planner, an auditor, an analyst, an accountant, and a banker. We met thrice a week to share ideas and discuss the project’s progress. We used these meetings to plan, share updates, exchange expertise and forge the way forward. Within two months of regular meetings, we managed to create a well-thought-out five-year financial strategy that our client could bank on to take his company to the next level.
25. Which Financial Sub-Sector Do You Have The Most Experience In?
In my eight-year working experience, I’ve worked in governmental and non-governmental organizations, which has given me a wide range of expertise in financial procedures. Being part of the public and private sectors has allowed me to perfect my finance, communication, leadership, and planning skills. I believe that my vast knowledge and experience make me an ideal candidate and if you hire me, I will replicate my vast experience for your company’s benefit.
Conclusion
Penetrating the financial industry and creating a lucrative career in finance is become more difficult due to the high number of qualified candidates applying for the limited number of job vacancies. If you desire a career in financial planning and analysis, you must capitalize on every available resource to adequately equip you to ensure success in the job search. Having a comprehensive knowledge of the industry will help you to stand out, beat the competition, and get your dream job.