FAQs in research interviews

DCF
o What is Dividend discount model and how does it work
o What is Gordon Growth Model
o What is Terminal Value
o What is Intrinsic Value
o What is CAPM & required Rate of Return
o How do you measure Risk Free Rate
o What is Risk Premium
o What is Beta & its formula
o What are cyclical & defensive stocks
o How do you calculate Free Cash Flow
To the firm : FCFF
To the equity share holders: FCFE
o How do you find out the value of a company using FCFF discounting approach
o Why do you use WACC to discount FCFF and not FCFE
o How do you calculate WACC
o How do you estimate Growth Rate while projecting future cash flows
o How do you estimate the beta of a company not listed on exchange or not being actively
traded
Relative Valuation: How do you interpret, calculate and apply each of the following multiples
o PE
o PB
o PS
o P to CF
o EV/EBITDA
Financial Statement Analysis
o Structure of Income Statement
o What is operating income or what is EBIT
o How do you calculate EPS & Diluted EPS
o What is leverage ratio, profit margin, asset turnover, interest coverage ratio
o What are other comprehensive incomes and how do you treat them as per IFRS and US
GAAP
o Expect questions that what is minority shares, how does goodwill arise, what is treasury
stocks, deferred revenue expenses
Other Financial terminologies
o What is a debenture
o What is a preferred stock
o What do you understand by the term recession/inflation?
o What is the relationship between price of a bond and interest rates?
o What is money market
o What is Market Share
o What is Market Capitalization
o What is Treasury stock
o What is Goodwill and how does it arise in books
o What is cost of equity and how do you calculate it (hint: using CAPM)
o
General:
o What is the present state of Indian economy
o What is prevailing PE ratio of Nifty or Sensex
o What is prevailing EPS of Nifty or Sensex
o What do you think would happen to the interest rates in near future
HR Related:
o How do you fit into this profile
o Why this company
o Why this profile
o What do you know about us
o What would be your major strengths or weaknesses at this job
o Why did you choose ICFP and how did it help
Be good at questions related to guesstimates:
o Example: How many white shirts are bought in Delhi in a normal month
o Carry pen and paper and borrow 30 sec to 60 sec to frame an architecture before
answering such questions

How to prepare for specific profiles:
Focus on CFA L1 FRA (2
nd
and last unit) and CFA L2 Equity (entire syllabus) for equity research and
analytical interviews. (Knowledge of Financial Modeling is must).
o Must have in depth knowledge about any one of the companies listed in India. You must be
able to explain its key revenue and cost drivers along with the major factors upon which the
growth of this companys revenue depend upon. You must know the major sources of its
revenues (product wise) and major areas of expenditures. Collect information about all its
major products and competitors. Please be updated about the latest news items in the
industry. Goes without saying, know the lasts share price in the market.
Focus on CFA L1 Fixed income and Derivatives of L2 for profiles including and similar to the one in
Black Rock
Focus on CFA L1 FRA, CFA L1 Fixed Income, any text related to credit rating and industry analysis
(equity of L1 & L2) for all profiles related to credit research and analysis (Knowledge of Financial
Modeling is must)

General Preparation Tips:
Read news events of last one month including but not limited to global and domestic equity news,
major M&As, important highlights
Be prepared to answer the question where would you like invest your own money in present times
and back your answer with solid reasoning and statistics. Stick to your answer as the interviewer is
surely going to test your reasoning and confidence at the same time
Be aware of key economic indicators such as latest GDP growth rates, level of absolute GDP, inflation,
interest rates (10 year yield, MIBOR, CRR, SLR Repo Rate etc), IIP growth of latest quarters, exchange
rate of INR vs USD, EUR, GBP etc
Read company websites and obtain maximum information about the profile
Connect using linkedin with few junior level individuals in the company and understand about
selection process, profile and internal environment

What you must DO:
Dress to perfection.. for male candidates.. wear plain light colored shirt with plain dark colored
trousers and a plain tie matching the attire. Be clean shaven with hair properly dressed.
Reach the venue before time.
Carry 5 copies of CV in a file/folder
Carry a copy of any projects undertaken with readiness answer anything from it. Preferably carry the
ones you are extremely confident about. Carry other important documents such as marks sheets or
any other certificate of excellence
Be prepared with a thorough introductory statement that talks about your achievements and story of
life
Greet your interviewer firmly with a smile
Try to wear a smile on your face to shadow any lack of confidence
If you are confident that you dont know the answer, freely express the apology instead of
attempting with a fluke.
BE well read about the company, profile and major competitors
Quote examples in your questions just like you would do it while telling an interesting tale of a story
Be courteous and polite all times
Do talk of your achievements in life


What you must NOT DO:
Dont carry untidy looks
Since most of the questions stem from your CV itself, dont mention anything in the CV that you
cannot substantiate in details
Dont keep everything to be prepared for the last days, interview preparation should be spread
across a fairly long period of time.


Some questions from the past interviews:

Anuj Questions:
1- Dividend discount model
2- CAPM
3- Company paid off 100mn debt with cash and bought, equipments worth 500mn. what is its effect
on P&L, Balance sheet and cash flow statements?
4- What do you understand of 2008 debt crisis?
5- What are different entries on the liability side of balance sheet of a bank ?
6- Is that possible for two similar companies with same revenue to have different operating margins?
If yes then what is the reason?
7- What is your view on present economic conditions ?
8- What should be RBI's stand on inflation and GDP growth ?
9- What are the entries that you could find under the COGS segment of Maruti ?
10- Major areas to look for while evaluating maruti as a company
11- All the financial ratios and what do they mean?
12- In relative valuation which ratio is good for automobile sector and why ?
13- What is your view on power sector its growth drivers and major problems?
14- Why does there is no entry on P&L statement for the principal payment of debt ?
15- How will you choose a comany or a sector to write a report on ?
16- Potters 5 model implemented on auto sector.
17- FCFF & FCFE

Himanshu Questions (strategic analyst):
-> SWOT analysis
->Guesstimates
->Consumers Behaviour in India
->Strategic Management


Avinash Questions:

1. REPO & Reverse REPO.
2. Equity Valuation Methods DCF, FCFE
3. Difference between private equity & investment bank
4. Assume a company and make its I/S and tell all the business processes.
5.NPV, IRR
6. Private equity invest in which companies?/
7. Guesstimates How many ties sold in a year in New Delhi?
8. Impact of interest rates on different business cycles?
9.How to control Inflation?
10. Various Ratios
11. A US based ECG maker wants to enter turkey. What do they require and need to know? Is the
business profitable?
12. Oil & Gas Sector: Porter's Five Forces
13. Approach to pick a company or stock?
14. after quaterly results. Comapny A's Net Income up by 10% & EPS up by 3%, Company B NI up
by 30% & EPS up by 9%. If Company A's stock prices dips by 5% how will company B's stock
behave? Assume both are in same sector.

Vineet

1.Meaning of 10 K,8 K filings and the the kind of work done during internship.

2.If an Indian/foreign company raises money in US market what will it file annually with SEC
there?Will it be 10 K or something else?

3.The format of income statement

4.What would happen if the big players enter food and beverage industry?

5.What do you think will happen to the food and beverage industry if the food prices increase
continously in the long run?

6.What steps can be taken if the cost of packing has increased in case of food products in order to
make them viable?

7.If a bank has given a loan of 50000 for 5 years then where do you think the amount repaid in terms
of principal and interest will be shown in the financial statements?


Samir Ishan Ghosh:

2nd Last personal interview: 1) case study in which i was given ,transaction and asked in which
accounts it it affect, i was able detect the transactions.
2) i was asked regarding free cash flow; i told mam the formula along with that i told her how it is
used also,including economic conditions.
3)there were plinties of question asked from rbi rules ,like waht if rbi takes following action and
therir significance.
4) she did ask me guess estimate question that burger king is goin to come to india the ,indentify how
much sales it can make every month, i gave the answer using cluster analysis ,and showed her the
imapct on sales which will be faced from mcdonlads.
5) she asked me that if there are two segments in business only and their gorss profit margin is same
but overall marging is not same ,to give reason , i showed her calculation and and proved her it can
be.
6)she asked why cash and equicalents are not included when calculating E.V,
7) she gave me many sceneriaos in which she asked what if kind of question.

final round: 1)sir asked me different business cyles and i explaind by writing what u explained us
that day,

2)he asked me how u will value hero motorcop,i had done my internship on dat so i was able 2
explain,

3) he was expecting brief and crsip answers,,he asked about barcko ombama strategy in which i
explained that barck obama is goning to increase taxes on rich and reduce spending, he also asked
regarding greek debt criss , i told him how european central bank has purchased its bond n which two
payments are expiring ,

4) he gave some case studies regarding research work,

sir ,, in final round i was able to give answers to all n he agreed also bt i think i was too tired mentally
and could not keep up my body posture well ,which he expected from me,


Gautam:

1. Tell me about yourself and why would you choose smartcube??

2. what the is repo rate ?

3. what is the current inflation ?

4. what was the closing of the market yesterday and give me a rough estimate of the last 2 months
return from the markets

5.what is beta ?? can we have a negative beta ?? what is the current risk free rate??

6. If you were to make a cash flow statement what all entries you would need please write it and show
?

7. what is fcff and explain it ?

8. can you use fcff in a dcf model ?? and for what purpose ??

9.Can a company have a low or negative operating earnings but still have a positive net income ?? in
what situations please describe and explain ?

10.Consider a banks balance sheet and the bank issues a mortgage loan so what will the entry be and
also after a year when you receive your 1st installment what are the entries please explain?

11.Please tell me how would a manufacturer and a tourism industry company be affected if the us
dollar depreciated ?? please explain the scenarios ??

12.what does equity portion of the balance sheet contain ???

13. If you were to remove the Mcdonalds sales of all the outlets in the city . Please explain in steps
how would you go about it and what are the parameters you would consider in getting your data??


Sahil Chhiber:

1. no. of laptops sold in Delhi in the year 2011
2. If burger king wants to open up the store in developing countries
i.e India and china, according to you which is the best option
for them.
3. questions on my internship report
4. and some questions from my graduation projects


Arun Kumar Surniganti:

1) Self Inroduction.
2) Why I changed my professional line & how I think that I can fit into this line.
3) How according to me TSC would help its clients their Business Strategies & development.
4) What is market share.
5) A pictorial case study - showing that 5 major co. having 75% of market & many small players in
rest 25% - was asked to make comments on that case study.
6) Can Net income be more than Operating income.
7) How & what amount will be shown in balance sheet after 1 year of making loan of Rs.500,000/-

Vineet Sachdev:

1.Meaning of 10 K,8 K filings and the the kind of work done during internship.

2.If an Indian/foreign company raises money in US market what will it file annually with SEC
there?Will it be 10 K or something else?

3.The format of income statement

4.What would happen if the big players enter food and beverage industry?

5.What do you think will happen to the food and beverage industry if the food prices increase
continously in the long run?

6.What steps can be taken if the cost of packing has increased in case of food products in order to
make them viable?

7.If a bank has given a loan of 50000 for 5 years then where do you think the amount repaid in terms
of principal and interest will be shown in the financial statements?