Prepare for IB interviews with the most common technical, accounting, valuation and HR questions, plus tips on how to answer them.

Investment banking interviews follow a pattern: accounting, valuation, deal knowledge and fit. If you can answer the questions below clearly and out loud, you are ahead of most candidates.

Accounting questions

How do the three financial statements link? Net income from the income statement flows into retained earnings on the balance sheet and is the starting point of the cash flow statement. The cash flow statement's closing cash feeds the balance sheet cash line.

If depreciation rises by 10, what happens to the statements? Pre-tax income falls by 10, and net income falls by 10 times one minus the tax rate. On the cash flow statement, depreciation is added back, so cash rises by the tax saving. On the balance sheet, assets fall through lower net PP&E and cash rises, and retained earnings fall by the after-tax amount.

What is working capital? Current assets minus current liabilities, usually excluding cash and debt in modelling.

Valuation questions

Walk me through a DCF. Project free cash flows for five to ten years, calculate a terminal value using a perpetuity growth or exit multiple approach, discount everything at the weighted average cost of capital, add to get enterprise value, then subtract net debt to reach equity value.

What is the difference between enterprise value and equity value? Equity value is the value to shareholders. Enterprise value is the value of the whole operating business, equal to equity value plus debt, minority interest and preferred stock, minus cash.

When would you use comparable companies vs precedent transactions? Comps reflect where similar listed companies trade today. Precedents reflect prices paid in deals and usually include a control premium, so they tend to be higher.

What affects WACC? The cost of equity, the cost of debt after tax, and the capital structure. A higher beta or risk-free rate raises the cost of equity.

M&A and LBO questions

What is accretion/dilution? It tests whether an acquisition raises or lowers the acquirer's earnings per share after the deal.

Why does an LBO work? A buyer uses debt to fund much of the purchase, the company's cash flow repays the debt, and the equity return is magnified when the business is sold at a similar or higher value.

HR and fit questions

• Why investment banking? Link your background, skills you have built and what draws you to deal work.
• Walk me through your resume. Keep it to two minutes and finish with why you are here.
• Tell me about a deal you followed. Prepare one recent transaction: the rationale, valuation and your view.

How to prepare

1. Build a full three-statement model and DCF from scratch at least twice
2. Practise answering aloud, not just reading
3. Follow one or two live deals and be ready to discuss them
4. Do mock interviews with someone who has been on the other side

TWSS includes interview preparation as part of its placement support, helping candidates practise exactly these rounds.

Want mock interviews and technical coaching? Talk to a TWSS counsellor about the investment banking programme.