Financial Due Diligence Test
The Financial Due Diligence Test helps hiring teams assess candidates who review deal financials, earnings adjustments and balance sheet risks. It suits intermediate finance hiring for transaction advisory, M&A and private equity support roles where practical judgement matters.
Summary of the Financial Due Diligence Test
The Financial Due Diligence Test helps hiring teams assess candidates who review deal financials, earnings adjustments and balance sheet risks. It suits intermediate finance hiring for transaction advisory, M&A and private equity support roles where practical judgement matters.
3 dimensions, scored separately
Quality of earnings
This measures whether the candidate can identify non-recurring, non-operating or unusual items that distort EBITDA and reported performance. It matters because deal teams need a reliable view of sustainable earnings before making valuation and negotiation decisions.
Working capital normalisation
This measures whether the candidate can judge what normal working capital should look like at closing and detect timing effects or temporary actions. It matters because errors here can lead to poor purchase price adjustments and avoidable disputes.
Red flags
This measures whether the candidate can spot financial warning signs that may point to revenue quality issues, aggressive accounting or operational strain. It matters because early identification of red flags helps teams investigate risk before it becomes a costly surprise.
Everything about the Financial Due Diligence Test
Pair this test with the rest of the first round: springhire's candidate screening software adds a one-way video interview and resume scoring to the same candidate link, ranked in one report.
01What is the Financial Due Diligence Test?
This test measures whether a candidate can spot issues that affect a buyer's view of a target's earnings and closing balance sheet. It covers quality of earnings, working capital normalisation and common red flags that can change valuation, purchase price adjustments or post-close surprises. Questions focus on practical scenarios, such as one-off income in EBITDA or short-term actions taken to improve collections before closing. The assessment is built for intermediate finance candidates and uses a broader bank of questions so each candidate sees a randomised set in Springhire. Results help hiring teams identify people who can separate recurring performance from noise and recognise risk in deal situations.
02How does the Financial Due Diligence Test work?
Candidates answer 20 multiple-choice questions in 10 minutes. Questions are drawn from a bank of 60, so each candidate receives a randomised set. The test is set at an intermediate level and is auto-scored, giving hiring teams a consistent way to compare candidates on core due diligence judgement.
03Why is the Financial Due Diligence Test important to employers?
Hiring someone who cannot distinguish recurring earnings from one-off items or assess whether working capital has been managed artificially can create real deal risk. This test helps reduce that risk by showing who can evaluate financial adjustments, spot warning signs and make sound calls under time pressure.
How to interpret Financial Due Diligence Test results
Every candidate report scores each dimension separately. Here is what high and lower scores typically look like at work, and how to use them in your hiring decision.
Quality of earnings
High scorers: A high score suggests the candidate can separate sustainable earnings from one-off or misleading items with sound judgement.
Lower scorers: A low score suggests the candidate may struggle to adjust reported results for non-recurring items and may over-rely on headline EBITDA.
Working capital normalisation
High scorers: A high score suggests the candidate understands normal trading patterns and can assess whether pre-close working capital is representative.
Lower scorers: A low score suggests the candidate may miss temporary balance sheet movements or set weak working capital targets.
Red flags
High scorers: A high score suggests the candidate can identify warning signs quickly and knows which issues deserve follow-up in diligence.
Lower scorers: A low score suggests the candidate may overlook signs of earnings manipulation, cash pressure or unusual deal risk.
What job roles can you hire with the Financial Due Diligence Test?
- Financial Due Diligence Analyst
- Transaction Advisory Associate
- M&A Analyst
- Private Equity Analyst
- Corporate Development Analyst
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Frequently asked questions
This test fits candidates for analyst and associate roles involved in transaction support, M&A review or private equity deal work. It is best for people expected to assess earnings quality, working capital and financial risk in target companies.
The test covers quality of earnings, working capital normalisation and red flags in financial due diligence. Questions focus on practical judgement, including how to treat one-off items and how to assess unusual pre-close working capital movements.
Start with the overall score, then review performance by skill area. Strong candidates usually show balanced results across all three dimensions, while uneven scores can point to specific gaps in diligence judgement.
It can be useful for senior hires as a screening tool, but it is calibrated at an intermediate level. For experienced candidates, use it alongside case interviews, deal discussion and resume review.
Not very well. The questions are scenario-based and require candidates to apply finance concepts to deal situations, which makes practical understanding more important than memorising definitions.
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