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Happy Wednesday, future bankers!

Hope everyone is doing well! Today we’re going over Cash Flow from Financing Line items, a time you bet on yourself, and Spotify’s big earnings beat.

🚀 Let’s get into it.

🔢 Technical Question

What are some examples of line items found in a company’s Cash Flow from Financing section of the Cash Flow Statement?

The Cash Flow from Financing section of the Cash Flow Statement typically includes the following line items:

1. Debt Issuances: This refers to the funds a company borrows from lenders. It’s an inflow of cash, as the company is raising capital.

2. Equity Issuances: This involves issuing shares in exchange for equity investments from the market. Like debt issuances, it’s also an inflow of cash.

3. Share Buybacks: This is when a company repurchases its own shares that were previously issued and are trading in the open market. It’s an outflow of cash, as the company is using its cash to reduce the total number of shares in circulation.

4. Debt Repayment: This is the repayment of the principal amount of a loan at its maturity date. It’s an outflow of cash, as the company is using its cash to pay back its debt.

5. Dividends: These are recurring or one-time cash payments made to equity shareholders. It’s an outflow of cash, as the company is distributing its earnings to its shareholders.

The Cash Flow from Financing section essentially provides information about how a company raises capital and pays it back to its investors, both debt and equity. It reflects how a company manages its capital structure, which is a key aspect of a company’s financial health and stability. It’s important for investors as it shows the company’s ability to meet its financial obligations, invest in new opportunities, and return money to shareholders.

🗣 Behavioral Question

Tell me about a time that you took a risk and bet on yourself.

Here are some best practices to follow when responding to the question:

1. Choose a Relevant Example: Select a situation where you took a calculated risk that had a significant impact on your career or personal growth. This could be a project you undertook, a job change, or a personal initiative.

2. Use the STAR Method: Structure your response using the STAR method:

   • Situation: Describe the context or background.

   • Task: Explain what your responsibility was in that situation.

   • Action: Discuss the actions you took, emphasizing the risks involved.

   • Result: Share the outcome of your actions, focusing on your learnings and how it helped you grow.

3. Highlight Your Thought Process: Explain why you considered it a risk and how you evaluated the pros and cons before deciding to take the leap. This shows your decision-making skills.

4. Focus on Personal Growth: Even if the outcome wasn’t entirely positive, focus on what you learned from the experience and how it contributed to your personal or professional growth.

5. Be Honest and Authentic: Authenticity resonates with interviewers. Don’t fabricate stories. Choose an example that genuinely represents your risk-taking ability.

Remember, the aim is to demonstrate your ability to step out of your comfort zone, make tough decisions, and handle uncertainty.

🗞 Industry News

🎧 Spotify’s Price Hikes Lead to Profits

Spotify reported its fiscal first quarter earnings, surpassing expectations and turning a profit as it continues to implement its “efficiency” strategy. The audio giant has committed to multiple rounds of layoffs, price increases, and other initiatives to boost top-line growth and improve margins. Despite spending billions on its push into the crowded podcast market, Spotify reported an operating income of 168 million euros ($179 million), compared with a loss of 156 million euros in the prior-year period. The company also guided to a strong Q2 operating income of 250 million euros, well ahead of Wall Street consensus expectations.

In addition to more deliberate spending, Spotify plans to raise prices by about $1 to $2 a month in five markets, including the UK, Australia, and Pakistan. The streaming service reported net income of 197 million euros ($210 million), or earnings of 0.97 euros per share, ahead of analyst expectations. Gross margins came in stronger than expected at 27.6%, beating company guidance of 26.4%. The company expects margins to tick up to 28.1% in the second quarter, primarily driven by year-over-year improvements in music and podcasting. Spotify’s stock has surged more than 100% over the past year and is up 43% year to date. The company has pledged to improve its profitability beginning in 2023 on a gross margin and operating income basis.

Read more about this story below.

Thanks for tuning in today! Best of luck to everyone working through recruiting right now. If you sign an offer, reply to this email and let us know about it! Like seriously, do it—we’d love to hear about it!