Financial Due Diligence (FDD) Domain -
Frequently Asked Technical Interview Questions

     Average CTC: 8 to 13 LPA (approx.)

    Technical Questions :

• What is your understanding of Financial Due Diligence?
• What are the main scopes of Financial Due Diligence?
• Explain broad differences in NPV and IRR.
• Given the WACC equation, a company should have 100% debt, because that is the point where the cost of capital will be minimized. Is this correct?
• Explain the difference between Dividend Payout, Dividend Rate and Dividend Yield.
• As a manager, what would your endeavor be while looking at a firm’s working capital?
• What kind of firms will you expect to have higher betas? Which ones will have lower betas?
• While calculating the Weighted Average Cost of Capital, what weights should we use? Market Values or Book Values?
• What drives the Price to Earnings Ratio of a company?
• In what sectors do we use EV/EBITDA as a metric?
• What do we mean by Enterprise Value? How do we calculate it?
• Give an example of Short Term Provisions on the Balance Sheet
• Give an example of Long Term Provisions on the Balance Sheet.
• A company reports a profit of Rs 2000 crore. Its depreciation is 350 crore. Receivables last year were Rs 510 crore, this year are 620 crore. Payables were 340 crore last year and 420 crore this year. The company has planned a capital expenditure of Rs 1220 crore. Interest cost is 100 crore. Calculate the CFO, CFI and CFF for the company, assuming the company raises 800 crores in debt, and pays 400 crore as dividend.
• How do we calculate the beta for an unlisted firm?
• How can we calculate the cost of debt for a firm?
• How can a firm book revenue early? Give an example from any sector to explain this concept
• Explain with example the concept of Capitalization of any expense.
• Explain how seasonality affects the working capital of a firm?
• Discuss the implications of working capital management, with reference to firms like Flipkart and Future
• Retail (or Amazon and Walmart). What do you think is different in the two firms’ working capital scenarios?
• What are the elements that you think the two firms should manage well?
• Explain what interest coverage ratio is. Following are the interest coverage ratios for 4 firms. What would your analysis be on these firms?
• Can a company do well even if its Return on Equity is going down?
• Can a company do well even if its Return on Equity is going down? The current ratio of a company goes from 1 to 1.5, but cash balances have not increased. Would this be positive for the stock market?
• What is the boundary condition for a company to grow in terminal stage in a DCF Valuation?