Financial Modelling Interview Questions: From Basic to Advanced
Financial Modelling Interview Questions are asked to candidates during their interview for FMVA job roles. It covers basics, technical concepts, Excel skills, and accounting knowledge needed for finance roles.
Subham Sahoo25 Oct, 2025Share
Financial Modelling Interview Questions: Financial modelling is an important skill in the world of finance. It helps companies understand their future performance, calculate risks, and make strong business decisions. Candidates looking to crack the interview for the job roles of FMVA and others may face interviews that test their knowledge of financial modelling.
Financial Modelling Interview Questions will cover several types of questions, ranging from basic, technical, Excel-based, accounting, and valuation questions. Candidates should prepare for such interview questions well in advance so that they do not face any problem in the actual interview round.
Basic Financial Modelling Interview Questions
These are the first type of questions that candidates may face in the interview. The interviewers check if candidates know the meaning of financial modelling and why it is used. These basic questions test a candidate’s understanding of what financial modelling is and its significance.
Q1. What is financial modelling?
Financial modelling means making a structured plan, usually in Excel, to show the financial future of a company. It uses past data, assumptions, and formulas to predict revenue, expenses, and profits.
Q2. Why is financial modelling important?
It helps investors, banks, and managers decide whether to invest, give loans, or expand a company. For example, if a company wants to open a new store, a model can show how much money will be needed and how much profit can be expected.
Q3. What are the common types of financial models?
Some common models are:
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Three-statement model: connects the income statement, balance sheet, and cash flow.
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Discounted cash flow (DCF) model: used to find the value of a company based on future cash.
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Mergers and acquisitions model: shows the financial effect of two companies joining.
Q4. Who uses financial models?
Investment bankers, equity analysts, consultants, and corporate managers use models to make important business and financial decisions.
Technical Financial Modelling Questions
Technical questions check whether the candidate can build a financial model step by step. Such questions also test the candidate’s knowledge of linking statements and making accurate forecasts. Technical questions are important because they show whether candidates can build a reliable and useful financial model. Some of the technical financial modeling questions are provided below:
Q1. How do you build a financial model from scratch?
The process usually includes:
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Collecting historical data.
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Making assumptions about growth, costs, and investments.
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Building the income statement, balance sheet, and cash flow.
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Linking all three statements with formulas.
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Adding valuation methods like DCF.
Q2. What is sensitivity analysis?
It is a way to check how small changes in assumptions affect the result. For example, if sales grow by 10% instead of 8%, how will profit change? This helps in testing risks.
Q3. What is scenario analysis?
This involves creating different situations, like best case, base case, and worst case to see how the company’s future may change under each condition.
Q4. How do you check the accuracy of a model?
You can use error checks, balancing rules, and consistency checks. For example, the cash flow closing balance should always match the balance sheet cash balance.
Excel-Based Interview Questions
Since most financial models are made in Excel, interviewers often ask Excel-related questions. These check a candidate’s comfort with formulas, shortcuts, and functions. Excel-based questions are very common because almost all financial models depend on Excel. Some of the Excel-based interview questions, along with their proper responses, are provided below:
Q1. What Excel functions are commonly used in financial modelling?
Some key functions are:
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SUM: to add numbers.
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IF: for logical conditions.
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VLOOKUP / INDEX MATCH: for searching data.
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PMT: to calculate loan payments.
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NPV and IRR: to calculate present value and internal rate of return.
Q2. Why is Excel preferred for modelling?
Excel is easy to use, flexible, and has powerful tools like pivot tables, charts, and financial functions.
Q3. What keyboard shortcuts save time in modelling?
Examples include:
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Ctrl + C / Ctrl + V: copy and paste.
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Ctrl + Shift + Arrow keys: highlight large ranges.
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Alt + =: auto sum.
Q4. What is the importance of formatting in Excel models?
A clean and well-formatted model is easy to read and reduces mistakes. For example, inputs are often shown in blue, while formulas are shown in black.
Accounting and Valuation Questions
Accounting and valuation are the backbone of financial modelling. These questions test whether a candidate knows how to read statements and calculate company value. Some of the accounting and valuation questions asked in the interview are as follows:
Q1. What are the three main financial statements?
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Income Statement: shows revenue, costs, and profit.
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Balance Sheet: shows assets, liabilities, and equity.
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Cash Flow Statement: shows cash inflow and outflow.
Q2. How are the three statements linked?
Profit from the income statement flows into equity on the balance sheet. Cash from the cash flow statement updates the cash line on the balance sheet.
Q3. What is valuation in financial modelling?
Valuation means finding the worth of a company or project. It tells investors how much to pay for shares or assets.
Q4. What are common valuation methods?
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Discounted Cash Flow (DCF): values a company by estimating future cash flows and bringing them to today’s value.
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Comparable Company Analysis: compares with similar companies.
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Precedent Transactions: looks at prices paid in past deals.
Q5. Why is working capital important?
Working capital = current assets – current liabilities. It shows the short-term health of a company. Positive working capital means the company can pay its bills.
Tips to Prepare for Financial Modelling Interviews
Preparation is the key to success in interviews. With good practice and preparation, candidates can face financial modelling interviews with confidence. Some simple tips to crack the interview for the job roles of FMVA are as follows:
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Understand the basics: Be clear about financial statements, ratios, and valuation methods.
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Practice building models: Try making a three-statement model in Excel using sample company data.
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Learn Excel shortcuts: This saves time and shows efficiency during practical tests.
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Revise accounting concepts: Be comfortable with terms like revenue, expenses, assets, and liabilities.
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Study common interview questions: Go through examples of both basic and technical questions.
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Stay updated with market trends: Knowing about recent deals, mergers, or company performances adds value.
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Mock interviews: Practice with a friend or mentor to improve confidence and clarity.