The Capital Allocation Menu
A foundational interview question for corporate finance candidates who will support executive capital decisions.
What are the main ways a profitable company can use cash, and how would you frame the choice to a CFO?
3 questions reported in Berkshire Hathaway interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
Questions
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Model builds
Built in the spreadsheet grid
Project selection, returning capital and measuring per-share value. 2 questions
A foundational interview question for corporate finance candidates who will support executive capital decisions.
What are the main ways a profitable company can use cash, and how would you frame the choice to a CFO?
The central question of corporate finance. Expect it in any strategic finance interview.
A company generates $500m of annual free cash flow. Rank the uses of that cash and explain the framework you'd apply.
Regulatory capital, ROTE against cost of equity, and why EV is meaningless. 1 question
The float is what makes insurance unique. This tests understanding of the investment side of the business.
Explain the insurance float and how insurers invest it. What are the constraints on investment strategy, and how does this affect profitability?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Company tags reflect where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with Berkshire Hathaway.