Spring Week Interview Questions (investment banking)

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.

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.

Model answer

It is a plot of government bond yields across maturities, normally upward-sloping so longer maturities yield more. An inversion, where short-term rates exceed long-term rates, has historically preceded recessions, reflecting expectations of future rate cuts and slowing growth. It is a closely watched macro signal.

Model answer

Banking: transactions as the fastest way to learn how companies are valued, financed and sold; intensity and ownership early; evidence from things already done (internships, clubs, courses). Firm: concrete hooks — deals the firm did, group strengths, people spoken to (names if true), culture/platform fit. The firm part must be impossible to copy-paste to a competitor.