You are about to fulfil your MBA dream and start a new journey towards securing a job in your dream company. Because let’s face it, that is probably the road which will lead you to a comfortable life. Your b-school has equipped you with all the theoretical and practical knowledge needed to conquer the corporate world and you’re probably looking out for a finance profile. What do you do then? How do you go about preparing and securing a finance job? In this article, we will tell you about various job roles in finance, basic concepts you should know, prep tips and other reading materials. Read to know more…
Three areas where an MBA finance graduate may thrive:
- Banking Roles - Corporate Banking, Investment Banking, Retail Banking, Bank Treasury Management, Transaction Banking, etc
- Corporate Finance Roles - Treasury Management, Finance Manager, Accounts Manager etc are some popular corporate roles open to you.
- Other Finance Jobs - Analyst at a rating agency, Manager at Financial Consulting firms, Risk Manager at a Financial Institutions, Fund Manager at Insurance companies, Manager at new-age Fin-Tech companies like Wallets, SME Lending platforms, Venture Capital, etc.
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- Time Value of Money: Remember our parents always used to say, “back in our days things were cheap! The rupee is losing its value day-by-day.” Well, they are talking about the Time Value of Money. Things that you need to know about this concept are present value and future value. This process forms the basic structure of future finance concepts. This will also help you in making capital budgeting decisions. Hence, interviewers will expect that you know the basics.
- Multi-Period Model of TVM: When the past, present and future value of money come together, they create a multi-period model of TVM. This causes multiple cash flows. You must know the 4 types of cash flows - Annuities, Perpetuities, Growing Annuities and Perpetuities, Irregular Cash Flows. A commonly asked question by the interviewer is - How are investment decisions made? What makes a manager choose one project over others?
- Capital Budgeting: Capital budgeting is a planning process used to determine the expenditure of an organisation’s long-term investments such as - new machinery, replacement machinery, new plants, new products, research development, etc. Four methods you must know are - Net percent value, internal rate of returns, benefit-cost ratio and profitability index.
- Stock Marketing: Stock market enthusiasts and future venture capitalists will know each and everything about the stock market. However, for those who are a novice in this field, knowing concepts like - IPO, joint-stock, equity shares, the primary and secondary market will help.
- Basic Derivative Concepts: Derivatives are financial contracts that drive the value for underlying assets. This asset could be anything like stocks, indices, commodities, currencies, exchange rates or rate of interest. By now you must be knowing that there are two types of derivatives - futures and options (call v/s puts). Some basic terminology you should know is strike prices and exercise prices, expiry or expiration date, European v/s American options and exercising options.
- Working Capital Management: Working capital management is critical for the health of any firm. It ensures that the firm is able to continue its operation and meets its short-term debts and operational expenses. Things you need to learn in these concepts are - current assets and current liabilities, account receivables turnover, receivable, account payable turnover, payable period, inventory turnover, inventory turnover period.
- Treasury: Treasury manager in a banking setup, controls and manages the bank’s money (in terms of capital and liquidity) and makes sure that all parts of the bank can readily access the cash they need for their business activities. Key concepts one be aware of are - cash forecasting, working capital management, cash management, investment management, fundraising, etc.
- Credit Analysis & Rating: Credit Analysis & Rating is one of the most fundamental functions of a bank. Rigour of the process defines the long term health of the bank. As a relationship manager, you should be aware of the NPA (Non- Performing Assets) and should be able to evaluate the business on merit and account of risk before handing out loans. For this profile, you need to learn about accounting, valuation, capital building, forecasting, risk management, etc.
- Transactional Banking: This is a part of corporate banking. One needs to be well-versed with the actual flow of money, in order to be a transactional banker. For this profile read about the SWIFT model; the difference between NEFT, RTGs, IMPS, Cheque Payment, UPI, Wallet Payment, etc; Trade Finance, Supplier’s Credit, Bank Overdraft or Cash Credit.
- Restructuring: Restructuring means the reorganisation of companies with outstanding obligations. As a transaction advisory, investment banker or a part corporate finance team it is your job to help them come out of their financial hardship and avoid bankruptcy. Hence, for this profile, you need to know each and everything about “corporate debt restructuring”. Read and go through as many restructuring cases as you can.
- Due-diligence: If you want to be an investment advisor or into investment banking, then due-diligence is something you need to be aware of. You will be a part of the due-diligence team that goes through documents, verifying data, etc. You should know how to investigate and make informed decisions after comparing its costs, benefits or risks. For this, you need to learn more about merger & acquisition, privatisation, and other similar corporate concepts. You also need to be good at shareholder analysis and familiar with principles of valuation. Questions you may be asked -
- What is due diligence?
- How to structure an acquisition?
- Case related questions
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- If you want to do well in your finance interview then a deeper understanding of the concepts mentioned above is important. Apart from that, you should also be a pro at MS excel, should balance sheet like a boss (or at least understand the inner workings and what each term means), know GAAP and income statements.
- Stay up-to-date with all the latest developments that are taking place in the area of finance. For this, you need to do a lot of reading. Your reading diet should have a healthy balance of business newspapers, periodicals, journals, online resources, etc.
- Be prepared to be grilled over the minutest details that have been mentioned in your resume. Preparing a mind-blowing answer for, “tell me about yourself” is a must. While you are answering that, you can also mention things from your past experiences or extracurricular activities. You don’t have to brag but tell them the impact they have made in your life.
- Other than that, some basic hygiene checks like - company research, how to approach a certain company interview process (GD, PI, case interviews), grooming and body language will do you good in a finance interview.
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