Accounting – Income Statement
Articles
What Is EBITDA and Why Do Interviewers Ask About It?
A clear explanation of what EBITDA means, why banking and PE interviewers care about it, and how it differs from Net Income and cash flow.
How to Calculate EBITDA From Net Income (Step-by-Step for Interviews)
The exact three-step bridge from Net Income to EBITDA, with a worked example and the mistakes interviewers watch for.
What Is EBITDA Normalization? Non-Recurring Items Explained
EBITDA normalization strips one-time gains and expenses out of reported EBITDA to reveal a company's true, sustainable run-rate earnings for valuation.
How to Answer the EBITDA Normalization Interview Question
A step-by-step framework for answering "walk me through how you would normalize EBITDA" in an IB or PE interview, with a worked example.
What Is Revenue Quality? Channel Stuffing, Bill-and-Hold, and Other Red Flags Explained
A plain-English guide to revenue quality: what channel stuffing and bill-and-hold accounting are, why rising Days Sales Outstanding (DSO) is a warning sign, and how analysts adjust reported revenue.
How to Answer a Revenue Quality Assessment Interview Question
A step-by-step approach for answering revenue quality interview questions: what to check first, how to calculate DSO, and how to build a quality-adjusted revenue figure under pressure.
What Is Earnings Quality? The Accruals Ratio and the Red Flags That Signal It's Slipping
A plain-English guide to earnings quality: what the accruals ratio measures, why net income and free cash flow can diverge, and the auditor signals worth checking before trusting a profit trend.
How to Answer an Earnings Quality Interview Question: Accruals Ratio Walkthrough
Step-by-step: how to calculate the accruals ratio and cash conversion ratio in an interview, structure your answer, and what a strong candidate says versus a weak one.
What Is Segment Reporting? How Cost Allocation Can Hide a Losing Business Unit
Segment footnotes are supposed to show which parts of a business make money — but management's cost-allocation choice can flatter a struggling segment. Here's what to check.
How to Analyze Segment Footnotes in a Finance Interview (Step-by-Step)
A four-step framework for reading a company's segment footnote in an interview: find the allocation method, test an alternative driver, quantify the swing, and check for corroborating red flags.
Cases
EBITDA Bridge from Net Income
Starting from Net Income, walk me through every add-back needed to get to EBITDA — and explain why each one belongs there.
EBITDA Normalization
As a financial analyst preparing a sell-side quality-of-earnings analysis, you are tasked with normalizing a company's reported EBITDA by stripping out non-recurring items, to determine the Adjusted EBITDA a buyer should actually pay for.
Revenue Quality Assessment
As a credit or equity research analyst, you are asked to assess the quality of a company's reported revenue growth — identifying signs such as channel stuffing and bill-and-hold arrangements — and calculate a quality-adjusted revenue figure that better reflects the company's sustainable, economic performance.
Earnings Quality: Red Flags
You're reviewing two years of financial statements for a company whose net income has been growing steadily. Walk me through how you'd assess the quality of those earnings — using the accruals ratio, the divergence between free cash flow and net income, and any other signals — to determine whether the reported profit growth is trustworthy or a red flag.