Hi guys:
On many of the technical interview guides, questions on 3 financial statements still use the assumption of tax rate = 40%. Given the new corporate tax rate is around 21%, do we need to adjust to using 20% when we walk through these questions in interviews?
Thanks!
70%
Most of the interviewers I've come across (PE) tell me to use 40% during the depreciation walkthrough question. Doesn't really matter at the end of the day. Main idea is making sure you understand the flow b/w the statements.
What's the depreciation walk through question?
walk me through how increasing depreciation by $10 affects the three financial statements
Ask the person who is interviewing what tax rate they want you to use if they don't already provide you with one. I've often been given a rate of 35% as a way of throwing me off from the typical 40%.
agreed, way more important to understand the concept. If you have a good foundation it really doesn't matter what rate you use.
Given you already know its 20%, just start your reply /answer by saying "Using a 20% tax rate, which is close to the current level of 21%, XXX...."
You should use 50% to signal you're expecting a phat bonus
So funny when candidates walk me through their bullshit, reheresed answer to this question but cant walk me through a P&L (always my follow up). Amazinh how many IB analysts truly dont know what a P&L looks like. It's like what do you do for a living?
I use 27% which would include estimated state & local taxes. Keep in mind though that what gets treated as taxable income under the current tax law is now fundamentally different from what used to be treated as taxable income.
Got asked to use 20% in the $10 depreciation question in several interviews this past fall
Well, I think they should clarify this among themselves. Everyone gives different rate and that is quite confusing.
Yeah, it is very weird. Why should we be interviewed according to the past situation? When I had an interview several months ago I presented only actual information about my tax rate. And I think you should do the same way. But the biggest problem for me in the interviews was to present my tax return correctly. I don't really understand all the numbers and rates so I have to use different services to help myself. I read on Reddit that gives the best services regarding tax return and its calculation. Going to check this company next time.
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