Corporate Finance Essentials
FREECapital structure, WACC, financing choices, and capital allocation. Essential concepts tested across all finance interviews.
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Modules
Capital Structure & Cost of Capital
52 questions
Why capital structure matters; business risk vs financial risk; cost of debt vs cost of equity intuition; WACC conceptually and what drives it; leverage trade-offs (tax shield vs distress risk); how these ideas show up in interviews (optimal leverage, should we lever up?).
Debt vs Equity Financing
52 questions
Financing choice logic: dilution vs fixed obligations; use cases for debt vs equity (growth, acquisitions, recapitalizations); basic instrument differences (senior debt, revolver, mezz, preferred); covenants and flexibility intuition; rating/market conditions at a high level for interview answers.
Dividends, Buybacks & Capital Allocation
52 questions
Capital allocation framework: reinvest, repay debt, pay dividends, buy back shares, acquire; when each makes sense; signaling and valuation effects; buybacks vs dividends; shareholder yield intuition; interview-style questions around what should this company do with excess cash? and trade-offs.
Return Metrics (IRR, MOIC, ROIC)
59 questions
Core return metrics and when to use them: IRR vs MOIC, time value of money intuition, reinvestment assumptions; ROIC and value creation (ROIC vs WACC); links to decision-making (projects, acquisitions, portfolio choices); common interview calculations and interpretation questions (good vs bad IRR, comparing deals).
Frequently Asked Questions
What corporate finance topics come up most in interviews?
The most common corporate finance interview topics are: capital structure (optimal debt-to-equity ratios, trade-off theory vs pecking order), WACC calculation, cost of equity (CAPM), dividend policy, working capital management, and capital budgeting (NPV, IRR, payback period). Understanding how these concepts interact is more important than memorizing formulas.
How do you calculate WACC?
WACC = (E/V × Ke) + (D/V × Kd × (1-T)). E = market value of equity, D = market value of debt, V = E + D. Ke = cost of equity (use CAPM: Rf + β × (Rm - Rf)). Kd = cost of debt (pre-tax yield). The tax shield reduces the effective cost of debt since interest is tax-deductible.
What is the Corporate Finance Essentials track?
The Corporate Finance Essentials track is a free track on Finance Interview Prep covering capital structure, WACC, cost of capital, dividends, working capital, and capital budgeting. It's designed for anyone preparing for investment banking, consulting, or corporate finance interviews.