MBA finance students always look for the best ways to make money and grow their businesses. MBA finance interview questions and answers can help you answer any of your finance questions. If you’re looking to understand better what an MBA finance program can offer, you may be interested in asking questions during an interview. MBA finance students have particular knowledge and skills that can be valuable in today’s economy. An MBA finance interview question is not a one-time event. It should be asked throughout the entire steps of applying for an MBA. The questions will help to assess an individual’s financial knowledge and understanding. Here are the top 30 MBA Finance Interview Questions and Answers:
Table of Contents
Question 01: What is an MBA in finance all about?
Answers: An MBA in finance is all about becoming a financial expert. It is a two-year degree that will make you a career in finance. You will learn about investment banking, financial analysis, and portfolio management.
Question 02: Explain cash flow statements.
Answers: A cash flow statement is a financial statement that tracks cash movements and cash equivalents throughout a given period. The information captures both the inflow and outflow of cash and cash equivalents and provides an overview of a company’s financial liquidity.
Question 03: Define working capital.
Answers: Working capital is an organization’s current assets minus its present liabilities. Working capital is an important term in business. It refers to the funds available to a company to cover its operations costs. This money can be used for paychecks, rent, and other necessary expenses. Working capital is also essential because it allows businesses to grow and expand.
Question 04: Explain the differences between profit and revenue.
Answers: Revenue is the total amount of money an organization brings in during an Earmarked period. Profit is the amount of money an organization/company has left after paying all its expenses.
Question 05: Is an MBA in finance useful?
Answers: While an MBA in finance is not required for all finance-related jobs, it may be helpful for those seeking management-level positions. In addition, an MBA in finance can provide students with the necessary skills and knowledge to be successful in finance-related careers.
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Question 06: What is the link between the income statement and the balance sheet?
Answers: The income statement and the balance sheet are linked because the net income for a period becomes a part of shareholders’ equity on the balance sheet. As a result, there is a strong link into the income statement & the balance sheet. For example, the income statement presents the company’s financial performance, while the balance sheet displays the company’s assets and liabilities. As a result, the income statement can be used to determine whether the company is in profit or loss. In contrast, the balance sheet can measure an organization’s liquidity and efficiency in paying its debts.
Question 07: What is the difference between commercial and investment banking?
Answers: Commercial banking is the provision of services by banks to businesses, usually involving creating new lines of credit and managing existing debt. Investment banking is the provision of services by banks to investors, generally involving underwriting and selling securities.
Question 08: Define goodwill with some examples.
Answers: Goodwill is the intangible asset representing a business’s value beyond its physical assets. It can be considered the “premium” a buyer is willing to pay for a firm above its book value. Goodwill can arise from various factors, including a strong brand, a loyal customer base, good relationships with suppliers, and a talented and motivated workforce.
Question 09: Which is better, MBA in finance or CA?
Answers: Your best option will depend on your specific goals and circumstances. However, an MBA in finance may be a better option if you are interested in working in the financial sector. On the other hand, a CA may be a better option if you are interested in working in a non-financial industry.
Question 10: What is a deferred tax liability, and why might one be created?
Answers: Deferred tax liability is an amount of money that a company owes in taxes at some point in the future. This can happen when a company has made money in the past but has not yet paid taxes on that income. However, the company may have to pay taxes on that income in the future, which would create a deferred tax liability.
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Question 11: Tell us something about capital budgeting.
Answers: Capital budgeting is a process used by organizations to identify and invest in long-term projects that will generate value. Capital budgeting aims to ensure that an organization’s capital is invested in projects that will create the highest return for the shareholders.
Several methods can be used in capital budgeting, with net present value, internal rate of return, & payback period. Organizations will typically use a combination of these methods to make investment decisions.
Question 12: What do you mean by Adjustment Entries?
Answers: An adjustment entry is a journal entry formed at the end of an accounting period to correct errors and bring the accounts up to date. Adjustment entries are a way for a business to track inventory movement. Adjustment entries determine how much inventory needs to be ordered and delivered and when and how to order the merchandise.
Question 13: What is the scope of the finance function?
Answers: The scope of the finance function can include financial planning, insurance, risk management, and investment management. Finance is responsible for the financial management of a business. It calculates and payouts money to its owners, debtors, and others involved in transactions. In addition, finance helps companies decide where to allocate resources and how much to borrow to grow their businesses.
Question 14: What is the Difference Between Cost Accounting and Costing?
Answers: Cost accounting is a branch of accounting that tracks, records, and analyzes the costs of manufacturing a product. Costing is a method used to determine the cost of manufacturing a good or serving a service.
Question 15: What do you mean by accounting concepts?
Answers: The accounting concepts are companies’ basic rules and guidelines to record and report their financial information. The most common accounting concepts are the accrual basis of accounting and the revenue recognition principle.
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Question 16: What do you mean by Fair Value?
Answers: Fair value estimates the effective market price of a product, service, or asset. The fair value of an asset is typically fixed by what somebody is willing to pay for it in the open market.
Question 17: What are capital expenditures?
Answers: Capital expenditures are the price range utilized by a corporation to gather or improve bodily belongings together with property, commercial buildings, or equipment. This type of expenditure is also used to develop new products or services and to finance major projects that will generate long-term value for the company.
Question 18: What do you mean by Hedging?
Answers: A hedge is an investment made to offset or protect against potential losses in another investment. Hedges are typically used by investors holding a position in an asset that is likely to experience price fluctuations.
Question 19: Advantages of Double Entry system of Accounting:
Answers: The double entry accounting system is a standard accounting system used in many countries. It is simple and efficient, straightforwardly allowing for recording transactions. This system also allows for better financial control over the business.
- A double entry accounting system is a systematic and organized way of keeping financial records. This system provides a clear picture of the financial position of a business.
- The double entry system of accounting is beneficial in preparing financial statements. This system helps identify areas where the company is making a profit and where it is incurring a loss.
- A double entry system of accounting helps in detecting errors and frauds. This system provides a check and balance between the two parties involved in a transaction.
- A dual entry system of accounting is beneficial in decision-making. This system provides accurate information, which is very helpful in making sound business decisions.
Question 20: Explain Future and Forward Contract.
Answers: A futures contract is an agreement between two groups to buy or sell an asset at a future date. For example, the buyer agrees to purchase the investment, and the seller agrees to sell the asset at a price agreed upon today.
A forward contract is an agreement between two groups to buy or sell an asset at a future date. The buyer agrees to purchase the support, and the seller agrees to sell the asset at a price agreed upon today. The price is typically higher than the spot price because the buyer is taking on the risk of the asset’s price changing.
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Question 21: What is finance?
Answers: Finance is the process of organizing, investing, and managing assets. It is the key to economic success and stability. In today’s economy, finance is critical for businesses to function and for individuals to make decisions.
Question 22: What do you mean by the Put Option?
Answers: The put option is a financial instrument that allows investors to buy an investment for the promise of receiving fixed, predetermined payouts over time. This type of investment is popular among investors because it will enable them to speculate on future price changes in the market. In addition, put options are often used by investors as hedges against potential losses they may experience in the market.
Question 23: What is meant by the Single Audit process?
Answers: The Single Audit process is a method used by auditors to assess an organization’s compliance with laws and regulations. The process involves auditors reviewing an organization’s financial statements and other records to determine whether the company complies with applicable laws and regulations.
Question 24: What do you mean by Deferred Tax Liability?
Answers: Deferred tax is a tax liability that an organization has incurred but has not yet paid. This liability arises when a company’s financial statements show that it owes taxes in the future, but the taxes have not yet been paid.
Question 25: What major factors drive mergers and acquisitions?
Answers: Major factors that drive mergers and acquisitions include market competition, economies of scale, and the desire to increase market share. Other factors can include diversifying products and services, gaining access to new technology or talent, and reducing costs.
Question 26: What is the Difference Between a Journal Entry and a Ledger?
Answers: A journal entry is an act of recording a transaction in a journal. A ledger is a book that contains a company’s financial records.
Question 27: What is Marginal Costing?
Answers: Marginal costing is a method that includes all variable production costs in the cost per unit of output. This step is used to decide how to allocate resources and price products.
Question 28: Some handy tips to get the ‘financial nuances’ right.
Answers: There’s no one right way to handle money, but there are some things you can do to ensure you’re getting the financial nuances right. Following these good tips can make a successful economic life that works for you and your family.
- When it comes to financial matters, there are specific ‘nuances’ that you need to be aware of
- These ‘nuances’ can often be the difference into making a profit or a loss.
- Therefore, it is crucial to understand them better before making any financial decisions.
- Some of the most important ‘nuances’ to be aware of include interest rates, tax implications, and exchange rates.
- If you are unsure about any of these ‘nuances,’ it is always best to seek professional advice before making any decisions.
Question 29: What is liquidity?
Answers: Liquidity measures how simple it is to sell or buy an asset. An asset with high liquidity can be bought or sold quickly and with little price impact. Conversely, an investment with low liquidity can be hard to buy or sell, and large trades can significantly affect the price.
Question 30: What is the difference between book value and market value?
Answers: The book value of an asset is its historical cost, while the market value is the investment’s current price. Book value is the market value of a book in its present condition. It is equal to the current day market price of the book divided by its total number of copies sold. Market value is the market value of a book at any given time. It is also equal to the current day market price of the book divided by its total number of copies sold.
In conclusion, MBA finance interview questions and answers can help professors determine if a student is ready to pursue a career in finance. While some questions may seem complicated, most students can answer them with this guide’s help. MBA finance interview questions and answers should be answered in a way that allows for an understanding of the individual’s financial situation. Thanks for reading this important post about MBA Finance Interview Questions and Answers.