Numerical Reasoning for Investment Banking
Investment banks assess numerical reasoning in online tests and technical interviews. They expect strong quantitative skills—mental math, data interpretation, and financial calculations. Here's what to expect and how to prepare.
Where Numerical Reasoning Appears
Online tests – Many banks use numerical reasoning tests (SHL, AON, or similar) early in the process. Tables, charts, financial data. Timed.
Mental math tests – Some tests focus on speed and accuracy: percentages, multiplication, division. No calculator or limited calculator use.
Technical interviews – "Walk me through a DCF." "What's the impact of a 10% increase in revenue on EBITDA?" Financial calculations, often on the spot.
Trading / markets – Quick mental math. "If the stock is at 50 and moves 2%, where is it?" Percentages, ratios, order of magnitude.
Key Topics
Percentages and ratios – Percent change, growth rates, margins. P/E, EV/EBITDA, debt/equity. Very common.
Financial statements – Revenue, costs, EBITDA, net income. How they flow. Basic accounting.
Valuation – DCF, multiples. You don't need to build a full model in an interview, but you should understand the logic and key drivers.
Mental math – 15% of 280 = 42. 400 × 25 = 10,000. 1.1 × 1.05 ≈ 1.155. Fast and accurate.
Data interpretation – Tables, charts. Extract values. Spot trends. Compare periods.
Preparation
- Practise numerical reasoning tests – Timed, with financial data. Get used to the format.
- Practise mental math – Percentages, multiplication, division. Speed and accuracy.
- Review financial concepts – Revenue, EBITDA, margins, multiples. Be comfortable with the formulas.
- Practise technical questions – "Walk me through X." "What happens if Y?" Structure your answers.
Practice with numerical reasoning questions and the numerical reasoning test.
Frequently Asked Questions
Do I need to know finance or accounting?
For numerical tests, basic familiarity helps—revenue, costs, profit, margins. For technical interviews, you need more depth: financial statements, valuation basics. If you're a non-finance candidate, expect to learn. If you're finance, expect to be drilled.
How important is mental math speed?
Very important for many tests and interviews. Banks often want quick, accurate calculations. Practise regularly. 10%, 5%, 20%, 25% of common numbers. Multiplication and division shortcuts.
What if I make a calculation error?
If you catch it, correct it. If the interviewer points it out, acknowledge and fix. Small errors are common; the key is to keep going and show your logic. Getting stuck or defensive is worse.