What are financial reasoning tests?
Financial reasoning tests are designed to test your aptitude for numbers and more specifically, financial problems. The questions on the test cover a huge variety of topics from ratios, graphs and fractions, to profit margins and balance sheets.
Practising financial reasoning tests is the best way to prepare for the test you’re about to take. We always recommend practising as many tests as you can to boost your confidence, speed and accuracy.
Why do employers use financial reasoning tests?
Financial reasoning tests are used by employers hiring for job roles with a financial bias. This is common in the technology industry.
The tests are set alongside a traditional interview process, to develop a broader profile of your strengths and weaknesses and whether you have the specific financial skills needed to do the job you’re applying for.
The good news is the test also offers you another chance to impress an employer - and plenty of preparation and practice beforehand is the best way to set yourself up for success.
What is the financial reasoning test format?
The test format can vary, but normally you’ll have to read through passages of text of about 150-200 words, extracting important information to answer the accompanying question.
The subject of the questions will vary, but you can expect basic maths principles such as ratios, graphs and sums, as well as challenges more specific to the financial sector such as profit and loss margins, balance sheets and market capitalisation.
What skills does financial reasoning test?
Your numerical skills, your knowledge of common financial terms and your ability to respond effectively under pressure. All of this helps an employer to build a clearer picture of you and how well you’re likely to fit into the role and company to which you’re applying.
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Sample Financial Reasoning Tests question Test your knowledge!
An investor buys 50 shares of stock at $20 per share. If the stock pays a quarterly dividend of $0.50 per share, what is the investor's total dividend income for one year?
- $100
- $50
- $200
- $250
A company's revenue was $150,000 in the first quarter and grew by 12% in the second quarter. How much revenue did the company make in the second quarter?
- $168,000
- $150,120
- $167,000
- $162,000
If the total direct costs of manufacturing a gadget is $20 and the company marks up the price by 35% for retail, what is the retail price of the gadget?
- $27
- $25
- $28
- $26.50
A bond with a face value of $1,000 has a coupon rate of 5%. What is the annual interest payment that will be received by the bondholder?
- $50
- $100
- $150
- $200
A portfolio manager invests $10,000 in a fund that experiences an annual growth rate of 8%. No additional deposits or withdrawals are made. What will be the value of the investment after 5 years, using compound interest?
- $14,693.28
- $14,000
- $13,680
- $15,000
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Financial Reasoning Tests Tips
- Familiarize With Financial Data
Get comfortable interpreting graphs, tables, and financial texts. By regularly reviewing various financial documents and data representation formats, you'll become more adept at quickly understanding and analyzing the information they convey. The familiarity will make the process much less daunting during the actual test.
- Brush Up on Basic Math Skills
Though not complex, financial reasoning tests do require a solid grasp of basic arithmetic, ratios, percentages, averages, and interest calculations. Spend time revisiting these foundational concepts, ensuring you can perform these calculations with ease. Consistent practice will help in speeding up your response time, which is crucial during the test.
- Time Management is Key
Effective time management can make a significant difference on timed tests. Practice using a timer to get a sense of how long you have for each question, and try to improve your pace without sacrificing accuracy. Remember, it's about finding a balance between speed and precision.
- Approach Questions Logically
Financial reasoning is not only about crunching numbers; it's about logical thinking and drawing conclusions from the data provided. When practicing, take a step back and approach each question methodically, ensuring you understand what's being asked before diving into calculations.
- Use Practice Tests from Techtest
Techtest's specially designed practice exams are a direct way to prepare for what you'll face in the real tests. They offer a variety of questions similar in structure and difficulty to those of actual tech-sector financial reasoning tests. Regular practice with these can build accuracy, speed, and confidence.
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Financial Reasoning Tests FAQs
- How are financial reasoning tests scored?
The test will be marked upon completion and your overall score is often compared to a normative group of people. The only other thing to be aware of with the financial reasoning test, is that sometimes marks are deducted for incorrect answers. However, if that’s the case, you’ll be made aware of it before you start the test.
- What are financial reasoning tests used for?
The tests are usually set by companies looking to hire for new roles. The test is used to give an employer a much clearer idea of your skillset and how you compare to the other applicants applying for the role.
For technology companies hiring for roles with a financial bias, this test is incredibly useful as it shows how applicants are likely to respond to common financial problems.
- What do financial reasoning tests involve?
The tests involve questions on mathematical and financial principles. They’re often a bit wordier and more detailed than a numerical reasoning test, as you may have to read through lengthy passages of text, extracting the important information along the way to answer the question at hand.
The financial reasoning test is always set by employers hiring for jobs where finance makes up a large part of the day-to-day workload.
- What do financial reasoning tests measure?
The tests measure a candidate’s ability to think clearly and calmly under pressure, to accurately answer basic mathematical problems and to show an aptitude and understanding for more specific financial questions.
- Where can I practice financial reasoning tests?
You can practice financial reasoning tests on the Tech Tests website. Practising will help you to improve your speed and accuracy, and you’ll also be able to pick up helpful hints and tips along the way.
- Which employers use financial reasoning tests?
Employers in the tech industry will use this specific test when hiring for roles that require strong numerical and financial skills. The test is also used by employers in a huge variety of industries, but most commonly by finance companies.