How to Memorize Investment Banking Technicals (and Not Forget Them)

Free sample from the Deskcraft question bank

Cramming technicals the week before fails for one reason: you forget most of it within days. The fix used by top students is spaced repetition — reviewing each fact on a widening schedule, so it moves into long-term memory instead of fading. Deskcraft automates this: every question you miss in a drill, mock or coaching session is scheduled to come back before you forget it, and the ones you keep missing return sooner. Below are the highest-yield technicals to commit to memory — the three statements, the DCF chain, the paper LBO and accretion/dilution — sampled from the Deskcraft bank. Drill them, and let the review engine keep them sharp until interview day.

1. Walk me through the three financial statements and how they connect.

Model answer

The income statement shows profitability over a period, ending in net income. The cash flow statement starts from net income, adds back non-cash items (D&A, SBC), adjusts for changes in working capital, then shows investing and financing flows to reach the change in cash. The balance sheet is a point-in-time snapshot: net income flows into retained earnings, the ending cash from the CFS becomes cash on the BS, and PP&E links via capex and depreciation. Assets = liabilities + equity must always hold.

2. What are the three financial statements and what does each show?

Model answer

The income statement shows profitability over a period (revenue down to net income). The balance sheet shows financial position at a point in time (assets = liabilities + equity). The cash flow statement shows actual cash movement over a period across operating, investing and financing, reconciling net income to the change in cash. They link: net income flows to the CFS and to retained earnings, and ending cash on the CFS is the cash line on the BS.

3. What is WACC and what is the formula?

Model answer

It is the blended required return of all capital providers: WACC equals equity weight times cost of equity plus debt weight times after-tax cost of debt. It is the discount rate for unlevered free cash flow because those cash flows go to both debt and equity holders, and the weights use market values at a target capital structure.

4. What makes an acquisition accretive or dilutive to EPS?

Model answer

Compare the cost of the acquisition financing to the earnings you buy. An all-stock deal is generally accretive when the acquirer's P/E is higher than the target's (paying with expensive stock for cheaper earnings). A cash or debt deal is accretive when the after-tax cost of cash or debt is below the target's earnings yield. Synergies and financing effects then adjust the result.