Cash Flow Statement Interview Questions - English

General Questions

What is a cash flow statement, and why is it important?

Explain the purpose of the cash flow statement in financial reporting and how it provides insight into a company's liquidity and financial health.

Can you describe the three main sections of a cash flow statement?

Discuss operating activities, investing activities, and financing activities.

Detailed Questions

How do you prepare a cash flow statement using the direct method?

Explain the direct method of preparing the cash flow statement and how it differs from the indirect method.

How is the indirect method used to prepare a cash flow statement?

Describe the adjustments made to net income to arrive at cash flows from operating activities.

What is the difference between cash flow from operating activities and cash flow from investing activities?

Compare these two sections and provide examples of typical transactions in each category.

How do you handle non-cash transactions when preparing a cash flow statement?

Discuss how non-cash transactions, such as depreciation or stock-based compensation, are treated.

Can you explain how changes in working capital affect the cash flow statement?

Describe the impact of changes in accounts receivable, accounts payable, and inventory on cash flows.

Analytical Questions

How can you use the cash flow statement to assess a company's financial health?

Discuss how cash flow from operations, investing, and financing activities can provide insights into a company's stability and liquidity.

What is free cash flow, and how is it calculated?

Define free cash flow and describe how it’s calculated and its significance for evaluating a company’s financial performance.

How do you interpret negative cash flow from operations?

Explain potential reasons for negative cash flow from operations and how it could impact the company's overall financial situation.

Practical Questions

Describe a time when you had to prepare or analyse a cash flow statement. What challenges did you face?

Share a specific example from your experience, detailing how you approached the task and overcame any challenges.

How would you reconcile a discrepancy between the cash flow statement and the income statement?

Discuss methods for identifying and resolving discrepancies between these financial statements.

Preparing for these questions will help you demonstrate a solid understanding of cash flow statements and their significance in financial analysis.