55 FP&A interview questions with sample answers for practice
Updated 1 June 2023
Financial planning and analysis (FP&A) teams support financial management by forecasting, budgeting and analysing financial data to provide insights that inform strategic decision making. Potential employers ask FP&A candidates interview questions to see if their skills and experience align with the organisation's requirements. Learning about questions hiring managers use to evaluate your knowledge and skills can help you practise responses that increase your chances of success. In this article, we list 50 FP&A interview questions and provide sample responses to five additional questions to help you prepare.
16 general FP&A interview questions
General FP&A interview questions focus on basic financial planning and analysis concepts and are usually amongst the first questions in the interview. Here are 16 examples:
What is your understanding of financial planning and analysis?
How does FP&A support the strategic decision-making process?
Discuss the key components of a financial plan.
Explain the measures you use to ensure accuracy in your financial forecasts.
Define budgeting and describe your experience creating budgets.
What methods do you use to evaluate financial performance?
How do you create financial models?
How do you communicate financial information to non-financial partners?
Describe your experience with financial reporting.
How do you monitor and integrate new financial regulations and accounting standards?
Discuss the different financial statements.
What financial planning software have you used?
How does the FP&A team gather financial information?
How do you manage competing priorities in an FP&A role?
Explain how the FP&A team can protect confidential financial information.
What are financial objectives, and how do you set them?
14 interview questions about background and experience for financial planners and analysts
During the FP&A interview, potential employers ask various questions to evaluate your financial planning and analysis qualifications and experience. Here are 15 common background and experience questions:
What relevant certifications do you hold?
What is your professional experience in FP&A?
What is your experience in forecasting?
Do you know how to perform variance analysis?
What is your experience in managing financial projects?
Have you ever found financial inconsistencies in a firm? Discuss how you identified them, and highlight how you addressed them.
What is your experience in creating financial dashboards?
Discuss your experience with process improvement in FP&A.
What is your experience in financial compliance?
Have you performed financial audits before? How do you approach them?
Describe your approach when creating a financial plan for an organisation or new product.
Have you ever modelled revenue for an organisation in this industry?
Describe an experience where you helped a company eliminate financial risk.
Which company stocks do you monitor on the stock market?
20 in-depth questions for financial planners and analysts
In-depth questions evaluate your knowledge of technical aspects of FP&A and assess your ability to apply financial concepts. Here are 20 examples of in-depth questions:
What distinguishes EBITDA from net income?
How does working capital impact a company's financial health?
Compare and contrast NPV and IRR for investment analysis.
How do you conduct sensitivity analysis, and why is it important in financial forecasting?
Discuss the difference between the hurdle rate and the cost of capital.
Explain the drivers of a company's cost structure, and outline how they affect profitability.
How is economic value added in financial analysis?
Explain your understanding of the Monte Carlo simulation.
How do FP&A experts assess the potential impact of a market disruption on a company's financial performance?
Explain the financial ratios you use to assess a company's financial health.
What is the weighted average cost of capital, or WACC, and how can you optimise it?
Discuss free cash flow and how you use it in financial forecasting.
What do you advise a company to consider before taking a loan?
Define residual income, and explain how FP&A experts measure a company's performance.
How do you evaluate the financial impact of a significant capital expenditure project?
How does return on investment influence financial analysis and decision-making?
Explain the difference between a profit-and-loss statement and a balance sheet.
Discuss the different valuation techniques for businesses and stocks.
Why do FP&A experts analyse long-term liability?
Why do financial experts exclude dividends from income statements?
5 interview questions with sample answers for financial planners and analysts
Review answers to the following five sample interview questions to help you practise for an FP&A interview:
1. Why is pursuing credit options better than raising equity?
Hiring managers ask this question to assess a candidate's understanding of financing options for a business. Explain that taking on debt through credit options such as loans or bonds allows a company to keep control over its ownership structure and maintain shareholder value. Mention that debt financing typically offers tax benefits, lower interest rates and a specific repayment schedule, making it a more attractive option than raising equity.
Example: 'Debt financing can be a more attractive option for companies than equity financing because it allows them to keep control over their ownership structure and maintain shareholder value. It involves the use of credit sources to raise capital for various projects. Debt financing also offers tax benefits, lower interest rates and a specific repayment schedule, making it a more predictable and manageable source of funding. It can be better for companies to limit debt to maintain financial stability and realise future growth opportunities.'
2. Which is more efficient, increasing the consumer base or raising prices?
Interviewers ask this question to assess your understanding of pricing strategy and marketing. In your answer, explain that the efficiency of each approach depends on supply and demand. Mention that it's efficient to increase prices when there's high demand and low supply and grow the customer base when there's low demand and high supply.
Example: 'Choosing to increase the consumer base or raise prices depends on the supply and demand of the product. In my previous job, the company had a high-demand product in a competitive market. Increasing prices didn't significantly affect demand and led to higher profit margins. I've also worked with a company that had a less unique product in a less competitive market. Expanding the consumer base was a more efficient strategy to increase revenue and market share. We implemented custom marketing campaigns to help improve customer loyalty, which helped grow the consumer base by 25% and increase revenue by 35%.'
3. How do assets and liabilities influence cash flow?
Interviewers ask this question to evaluate your understanding of financial statement analysis and cash flow management. Explain that assets and liabilities influence cash flow because they impact a company's ability to generate and manage cash. Mention that assets can generate cash through operations, investments or financing activities, while liabilities can reduce cash through interest payments or repayment obligations.
Example: 'A company's assets and liabilities impact how much cash it can raise and determine how to manage its cash flow. Assets can generate cash through operations, such as sales revenue, investments or financing activities, such as interest or dividend payments. Liabilities can absorb cash through interest payments or repayment obligations. For example, in one project, I identified and reduced the company's excess inventory levels by 20%, resulting in a £1 million reduction in carrying costs and a significant improvement in cash flow.'
4. What skills does a financial planning analyst require?
This question helps interviewers assess your understanding of the competencies that help individuals succeed in an FP&A role. Explain that a financial planning analyst requires soft skills like analytical skills, attention to detail, communication skills and the ability to work under pressure. Mention technical skills like understanding financial accounting, forecasting, budgeting and data analysis. Highlight your skills and consider aligning them to the job description to show the interviewer why you're an ideal candidate.
Example: 'Financial planning analysts require both soft and technical skills to be successful in their role. Some soft skills they require include analytical skills, attention to detail and communication skills. Examples of technical skills they require include understanding of financial accounting, forecasting, budgeting and data analysis. From my experience, I've gained and demonstrated soft skills like analytical and problem-solving skills, attention to detail, teamwork and ability to communicate complex financial information to partners at different levels. I'm also proficient in financial software and technology and have successfully delivered financial analysis, modelling and forecasting projects.'
5. Explain the difference between enterprise and equity value
Evaluating your understanding of enterprise and equity value helps potential employers determine if you can perform corporate valuation, merger and acquisition operations efficiently. Explain that enterprise value represents the total value of a company's operations, including its debt and equity, while equity value represents the value of a company's equity ownership only. Mention that enterprise value helps assess the overall value of a company, while equity value evaluates the value of a company's shares.
Example: 'Enterprise value and equity value are metrics in corporate valuation and M&A transactions. Enterprise value represents the total value of a company's operations, including its debt and equity. Equity value represents the value of a company's equity ownership only and helps evaluate the value of a company's shares.'
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