Investment Banking
80 sector analysis questions of the kind asked in investment banking interviews. Each carries a model answer, the concepts a complete response must hit, and graded feedback on your own attempt.
Industrials bankers ask this because aftermarket mix can transform valuation.
Why do investors value aftermarket revenue differently from original equipment sales?
Asked because backlog can be a real asset or a misleading headline number.
An industrial company says it has record backlog. What do you ask next?
A core industrials metric because orders lead reported revenue.
What is book-to-bill and why does it matter for an industrial company?
A common first-round renewable-power follow-up after an analyst discusses project scale or revenue.
A solar project has 100 MW of nameplate capacity and a 30% capacity factor. Calculate its expected annual generation in MWh. Then explain why capacity factor is more useful than nameplate capacity when comparing…
Asked in power-coverage interviews to test why dispatchable generation can earn value even when it runs infrequently.
Explain the difference between energy-market revenue and capacity-market revenue for a gas-fired power plant. Why can a plant that runs only during peak hours still be economically valuable?
The foundational asset management question. Fee-based business models are different from banking.
Explain the asset management business model. How do they generate revenue, and what are the key drivers of profitability?
The foundational FIG question. Every banking interview starts with the business model.
Walk me through how a commercial bank generates profit. What are the main revenue streams and cost drivers?
CROs are essential to pharma R&D. This tests understanding of the healthcare services ecosystem.
Explain the business model of a contract research organisation (CRO). How do they generate revenue, and what drives demand for their services?
Cybersecurity is a critical and growing sector. This tests understanding of the business model.
What are the common business models in cybersecurity, and how do they differ from traditional software?
Fintech is disrupting FIG. This tests understanding of the competitive landscape.
What are the key differences between fintech companies and traditional banks? How do their business models and economics compare?
Generics have different economics than branded pharma. This tests understanding of the value chain.
Explain the generic drug business model. How does it differ from branded pharmaceuticals, and what drives profitability?
Healthcare real estate is a growing asset class. This tests understanding of the property side of healthcare.
Explain the business model of a healthcare REIT. How do they generate revenue, and what are the key risks?
Healthcare services (hospitals, insurers, PBM) have different economics than medtech/pharma. This tests breadth.
Explain the business model of a hospital company. How do they generate revenue, and what are the key cost drivers?
Medical devices have different economics than pharma. This tests understanding of the subsector.
Explain the business model of a medical device company. How does it differ from pharmaceuticals, and what are the key value drivers?
The opening question for midstream and infrastructure coverage interviews.
Explain the business model of a pipeline company. How do they generate revenue and what are the key risks?
Restaurants have unique economics. This tests understanding of food service operations.
What are the key components of restaurant unit economics, and how do they differ from traditional retail?
Software business models are the foundation of tech coverage. This tests understanding of SaaS vs perpetual.
Explain the differences between SaaS and perpetual licensing business models. How do revenue recognition, economics, and valuation differ?
Gross margins are critical in software. This tests understanding of cost structure.
What drives gross margins in software companies, and what does margin compression indicate about the business?
Brand equity is the primary asset for consumer companies. This tests understanding of intangible value.
What framework do you use to assess brand equity, and how does it translate into financial performance?
Inventory management is critical to retail profitability. This tests operational analysis skills.
What metrics do you use to assess retail inventory management, and what do they tell you about the health of the business?
Unit economics determine retail profitability. This tests understanding of store-level performance.
What are the key components of retail unit economics, and how do you assess whether a store is generating adequate returns?
Food inflation significantly impacts consumer companies. This tests understanding of cost pass-through.
How do food price inflation affect different consumer companies, and what determines whether they can pass costs to consumers?
The foundational E&P valuation question. Every upstream interview starts here.
Walk me through how you value an oil and gas company's reserves. What's the standard approach and what are the key drivers?
Reimbursement determines whether healthcare products get paid for. Fundamental to understanding the sector.
Explain how reimbursement works for pharmaceuticals and medical devices. What are the key payers and how do they decide what to cover?
An insurance FIG interviewer asks this when testing whether a candidate can connect risk transfer to earnings and capital.
You are preparing a P&C insurer earnings preview. Explain what reinsurance is, the two common structures, and how buying more of it changes the insurer's earnings, risk and capital needs.
Insurance is a cyclical business. This tests whether you understand the industry dynamics.
Explain the insurance underwriting cycle. Why do insurance margins fluctuate so much, and what drives the cycle?
A basic industrials coverage question on how a production model changes forecasting and cash-flow risk.
Explain the difference between a make-to-stock manufacturer and a make-to-order manufacturer. How does each model change revenue visibility, working capital and downside risk?
Consumer coverage teams use this to test whether a candidate can connect a shelf-price change to consumer value and reported revenue.
A beverage company replaces its 16-ounce bottle at $4.00 with a 14-ounce bottle at $4.20. Explain the price-pack change, calculate the change in price per ounce, and say what you would monitor before calling it pricing…
A first-round technology coverage question testing whether you can describe a software company's customer and competitive position precisely.
A company sells workflow software only to dental practices, while another sells collaboration software to nearly any office. Explain which is vertical software and which is horizontal software, then compare their growth,…
The core downstream question. Refining margins are what separates integrated majors from pure-play E&P.
Explain the refining crack spread. What drives refining margins and why are they so volatile?
Healthcare coverage teams use this as a foundational test of how payment incentives can reshape an otherwise stable revenue pool.
What is a site-of-care shift in healthcare, and why can it matter to the revenue and valuation of providers, payers and medical-device companies?
Grid parity is the threshold where renewables compete without subsidies. Fundamental to understanding the energy transition.
Explain grid parity in renewable energy. When does it occur, and why doesn't it immediately drive fossil fuel displacement?
The renewables valuation foundation. Every power and clean energy interview uses LCOE.
Explain levelised cost of energy (LCOE). How is it calculated and why is it the standard metric for comparing different generation sources?
The patent cliff is the single most important concept in pharma valuation. Every healthcare interview covers it.
Explain the patent cliff for pharmaceutical companies. Why does it matter, and how do companies manage the risk?
A first-round FIG interviewer uses this to see whether you understand why deposits matter beyond their reported balance.
A regional bank says it has $50 billion of deposits. What makes those deposits valuable, and what would make you discount that headline number?
A common consumer coverage follow-up when a branded company is shifting distribution toward its own website.
A skincare brand sells a product for $100 direct to a consumer or for $55 wholesale to a retailer. Product cost is $25. The direct order also incurs $12 of fulfilment, payment, returns, and variable marketing cost. Which…
Healthcare coverage teams use this to test whether you can distinguish a real operating improvement from acquired growth.
A physician-services company reports 12% revenue growth, including 8% from acquisitions. How would you assess the quality and value of the remaining 4% same-store growth?
A sector judgement question for automation, robotics and factory equipment.
What makes industrial automation an attractive or unattractive sector for investors?
Asked in industrials and semiconductors when revenue disconnects from end demand.
Why does channel inventory matter when analysing an industrial supplier?
Consumer and retail coverage interviews open with the metric that defines the sector.
A retailer reports +5% same-store sales. Why isn't that enough information to know whether the business is healthy?
The foundational regulated utility question. Returns are set by regulators, not markets.
Explain how regulators determine the allowed return on equity for a utility. What factors go into the rate case, and how does this affect valuation?
CECL/IFRS 9 changed how banks reserve for losses. This tests understanding of current accounting.
Explain how banks calculate loan loss provisions under CECL. How does this differ from the old incurred loss model, and why does it matter for earnings volatility?
Cloud computing has transformed IT economics. This tests understanding of the shift to cloud.
What are the economics of cloud computing, and how does the shift from on-premise to cloud affect software companies and their customers?
ESG is increasingly important to consumers and investors. This tests understanding of sustainability trends.
How do environmental, social, and governance factors affect consumer companies, and what are the material impacts on financial performance?
Managed care has unique economics. This tests understanding of the insurance side of healthcare.
Explain the business model of a health insurance company. How do they generate profit, and what are the key risk factors?
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?
MLPs were the dominant structure for midstream energy. Understanding them is still relevant for existing infrastructure.
Explain the master limited partnership structure. Why were midstream energy companies organised as MLPs, and what are the key considerations for valuation?
Network effects are the strongest moat in technology. This tests understanding of competitive dynamics.
Explain how network effects work in technology businesses, and what determines whether they create sustainable competitive advantages?
Open source has disrupted software business models. This tests understanding of monetization.
What are the common business models for open source software companies, and how do they differ from traditional proprietary software?
PPAs are the financing mechanism for renewables. Understanding them is essential for energy project finance.
Explain a power purchase agreement. How does it affect project economics and what are the key terms to negotiate?
Churn is the killer of SaaS economics. This tests understanding of customer retention.
What are the key churn metrics for software companies, and what do they tell you about product quality and competitive position?
Consumer behavior drives demand. This tests understanding of demographic and psychographic trends.
What data sources and frameworks do you use to analyze consumer behavior trends, and how do you distinguish short-term fads from long-term shifts?
CAC analysis determines unit economics. This tests understanding of go-to-market efficiency.
What are the key metrics for analyzing customer acquisition in software companies, and how do you assess whether acquisition economics are sustainable?
Consumer companies vary widely in economic sensitivity. This tests understanding of cyclical dynamics.
What factors determine how cyclical a consumer company is, and how do you adjust valuation for economic sensitivity?
Private label has disrupted traditional brands. This tests understanding of competitive dynamics.
How does private label competition affect branded consumer companies, and what determines which brands can defend their position?
Channel strategy is critical to retail success. This tests understanding of go-to-market dynamics.
What factors do you consider when evaluating a retailer's channel strategy, and how do e-commerce and omnichannel affect the analysis?
Embedded finance is transforming fintech. This tests understanding of the integration model.
What is embedded finance, and how do embedded finance companies make money? How does this differ from traditional financial services?
Regulatory risk is omnipresent in healthcare. This tests understanding of the political/legal landscape.
What are the major sources of regulatory risk in healthcare, and how do they differ across subsectors? How do you model this risk in valuation?
APIs have become a core business model. This tests understanding of platform economics.
What are the business models for API-first companies, and how do they differ from traditional software models?
OFS companies are highly cyclical. This tests whether you understand the sector dynamics.
Explain the relationship between oilfield services companies and E&P operators. How does the cycle work, and why are OFS margins so volatile?
Digital transformation is reshaping retail. This tests understanding of technology disruption.
What are the key areas of digital transformation in retail, and how do they affect the competitive landscape?
LNG is a growing energy subsector with unique economics. This tests whether you understand the global gas market.
Explain how LNG pricing works and the economics of LNG transport. How does it differ from pipeline gas?
Every E&P valuation includes oil price sensitivity. This tests whether you understand the mechanics.
An E&P company has PV10 of $1 billion at $70/bbl oil. What happens to PV10 at $60/bbl and $80/bbl, and why is the relationship non-linear?
A margin-bridge question common when input costs are volatile.
An industrial company says margins fell because of price-cost lag. What does that mean?
The core technical in any technology coverage interview.
How do you value a software company, and why doesn't the standard EV/EBITDA framework work well for one that's growing 40% a year?
Post-2008, capital ratios are the first thing FIG analysts discuss. This tests regulatory knowledge.
Explain the key capital ratios that banks must maintain under Basel III. Why do they matter for valuation?
Pricing power is the core pharma investment thesis. This tests understanding of the market dynamics.
What factors determine whether a pharmaceutical company can charge high prices for a drug? Why do some drugs have strong pricing power while others don't?
R&D productivity is the core pharma investment thesis. This tests understanding of industry challenges.
Pharma companies spend more on R&D but approve fewer drugs per dollar spent. Why is R&D productivity declining, and what are companies doing about it?
AI is transforming technology. This tests understanding of the new business models.
What are the business models for AI companies, and how do they differ from traditional software economics?
Rate sensitivity is the single most important factor for bank earnings. This tests quantitative understanding.
A bank has $100 billion in interest-earning assets with an average yield of 5% and $80 billion in interest-bearing liabilities with an average cost of 2%. What happens to net interest income if rates rise by 100bp,…
Semiconductors are highly cyclical. This tests understanding of the chip industry dynamics.
What drives semiconductor cycles, and how do you assess where we are in the cycle? How does this affect valuation?
Supply chain disruptions have become critical. This tests understanding of operational risk.
How do you assess supply chain resilience, and what are the key factors that determine whether a company can weather disruptions?
The strategic question facing every energy coverage group. The energy transition changes asset values.
How does the energy transition affect the valuation of traditional fossil fuel assets, and how do you model the risk?
A harder scenario question connecting supply chain, pricing and margin.
A 15% tariff is imposed on a key imported component. How do you assess the impact on an industrial company?
Healthcare coverage teams use this to test whether you can identify the recurring economics embedded in a capital-equipment franchise.
A surgical-robotics company grows procedure revenue 18%, capital-equipment revenue 2%, and its installed base 10%. Management argues that the slowing equipment line is positive because the business is becoming more…
Healthcare coverage and biotech-focused funds start here.
A clinical-stage biotech has no revenue and one drug in Phase II. How do you value it?
Industrials and natural resources coverage test this constantly.
An industrial company is trading at 6x EV/EBITDA when its peers historically trade at 9x. Is it cheap?
Energy coverage and natural resources funds test reserve-based valuation directly.
How do you value an exploration and production company? Why don't the standard methodologies work?
Consumer coverage interviewers use this to test whether a candidate can look through a sales beat to the unit economics underneath it.
A branded food company reports 6% volume growth after increasing trade promotions. Net revenue grows 4%, gross margin falls 180 bps, and retailer inventory rises 9%. Management says the promotion is building household…
FIG coverage interviews test whether you can value a business where debt is inventory.
Why do some banks trade above tangible book value and others below? Give me the relationship, and explain what a bank can actually do about it.
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Firm names indicate where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with the firms named.