Financial Analyst
Interview Guide

The core modeling toolkit: DCF analysis, trading comparables (comps), precedent transaction analysis, and LBO modeling (for PE and IB roles). Excel proficiency is critical: VLOOKUP/INDEX MATCH, pivot tables, data tables, charts, and keyboard shortcuts. Being able to build a three-statement model from scratch is expected for most IB analyst positions.

Net income from the income statement flows to retained earnings on the balance sheet and is the starting point for the cash flow statement (indirect method). Capital expenditures from the cash flow statement increase PP&E on the balance sheet. Debt issuances from the financing section of the cash flow statement change long-term debt on the balance sheet. Changes in working capital (AR, AP, inventory) flow between the balance sheet and operating cash flows.

An LBO model evaluates a private equity acquisition where a company is purchased primarily with debt (leverage). The model projects operating cash flows to pay down debt over a 3–7 year holding period, then models an exit (IPO or sale). IRR and MoIC (Multiple on Invested Capital) are the key return metrics. LBO modeling is essential for PE and investment banking interviews.

Pre-revenue startups cannot be valued with traditional DCF or earnings multiples. Common approaches: 1) Comparable company analysis on revenue potential, not current revenue, 2) VC method — project exit value and discount to present by required return, 3) Berkus Method — valuing specific value-creation milestones, and 4) Scorecard method comparing to similar early-stage companies. The key is justifying your assumptions for market size, penetration, and timing.