A company’s Chief Financial Officer (CFO) holds a comprehensive perspective on the business. For executives, board members, and investors, asking a CFO targeted questions is a powerful method for understanding a company’s condition. This inquiry reveals the narrative behind the numbers, shedding light on strategy, operational health, and future challenges. The right questions can unlock a deeper understanding of a company’s trajectory.
Assessing Financial Health and Performance
A direct question like, “Can you provide an overview of our financial performance over the past quarter and year?” sets the stage for a broader discussion. To delve deeper, ask about the specific factors driving the results. For instance, “What are the key drivers of our revenue growth and profitability?” This encourages the CFO to articulate the products or market conditions contributing to the company’s success or struggles.
Understanding cash flow is another area of focus. A question such as, “Walk me through our cash flow statement; what are the biggest uses of cash?” provides insight into how the company funds its operations and investments. It is also practical to ask, “What is our current cash runway and burn rate?” This reveals how long the company can operate with its existing cash reserves, a direct measure of its financial endurance, especially for startups or businesses in high-growth phases.
A CFO’s analysis of metrics offers a snapshot of financial health. Inquiring about Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) can clarify operational profitability. Similarly, asking about free cash flow—the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets—demonstrates its ability to generate value for shareholders.
Understanding Business Operations and Efficiency
Questions about operational efficiency explore the “how” behind the numbers, focusing on the unit economics that determine profitability. Key Performance Indicators (KPIs) are the measurements that show if a company’s strategies are meeting its objectives. A primary question is, “What are our customer acquisition costs (CAC) and lifetime value (LTV), and how has that ratio trended over time?”
The relationship between what it costs to gain a new customer and the revenue that customer generates is a fundamental indicator of a sustainable business model. A healthy LTV/CAC ratio, often considered 3:1 or higher, suggests the business is efficiently acquiring profitable customers. Another insightful question is, “Which of our products or service lines carry the highest gross margins?” This helps identify the most profitable areas of the business and can inform decisions about where to allocate resources.
A CFO should be able to provide a detailed breakdown of profitability by product, service, or customer segment. To gauge the CFO’s handle on the day-to-day business, ask, “What are the top two or three operational KPIs you track, and why are they important?” This question reveals which levers the CFO believes are most impactful for driving performance. Common examples include metrics like revenue per employee, which measures overall productivity, or days sales outstanding, which indicates how quickly the company collects revenue after a sale.
Gauging Strategic Vision and Growth Plans
A CFO’s role in strategy and capital allocation is vital for long-term growth. A central question is, “How are we allocating capital between growth initiatives, operational improvements, and returning value to shareholders?” This reveals the company’s priorities and its approach to balancing investment in the future with rewarding current stakeholders. The answer provides a window into the strategic trade-offs the leadership team is making, and a CFO should be able to explain how these decisions align with overarching goals.
Looking further ahead, ask, “What do you see as the biggest financial opportunities for the company in the next three to five years?” This question tests the CFO’s forward-looking perspective and their ability to identify emerging trends or market openings. Their response can highlight areas of potential innovation, market expansion, or strategic partnerships.
Another strategic area involves future financing and acquisitions. A direct question like, “What is our strategy regarding future fundraising or potential M&A activity?” clarifies how the company plans to finance its growth ambitions. Whether the strategy is to rely on organic growth, seek external capital, or acquire other companies, the CFO’s answer will illuminate the path forward and the financial planning required.
Evaluating Risk Management and Headwinds
Understanding a business’s vulnerabilities and the plans to address them is part of a thorough assessment. A direct way to broach this topic is by asking, “What are the top three financial risks facing the business, and what are our mitigation plans?” This question prompts the CFO to identify and prioritize threats, which could range from competitive pressure to supply chain disruptions. The answer should detail the specific actions being taken to manage them.
To understand exposure to broader economic forces, ask, “How do you view our exposure to macroeconomic factors like inflation, interest rate changes, or currency fluctuations?” A CFO’s response should demonstrate a clear understanding of how these external variables could impact revenue, costs, and profitability.
Internal vulnerabilities are also important. Asking, “How robust are our internal financial controls to prevent fraud or errors?” evaluates the systems in place to protect the company’s assets and ensure the integrity of its financial reporting. This includes processes for everything from account reconciliation to cash disbursement and vendor engagement. Strong internal controls support sustainable growth and maintain stakeholder trust.
Questions for a Potential CFO Candidate
When interviewing a candidate for the CFO role, the questions shift to evaluating the individual’s capabilities, experience, and strategic mindset. The goal is to determine if their skills and leadership style align with the company’s needs and culture.
- What is your 30-60-90 day plan? This assesses a candidate’s proactivity and understanding of the role’s priorities. A strong answer outlines a structured plan for learning the business, identifying early wins, and beginning to implement their strategic vision, revealing their ability to hit the ground running.
- Describe a time you successfully navigated a financial crisis or downturn. This behavioral question tests a candidate’s composure under pressure and problem-solving skills. A compelling answer will detail the specific actions they took to stabilize the company, their decision-making process, and the ultimate outcome, demonstrating their resilience.
- How do you approach building and leading a finance team? This question reveals the candidate’s leadership philosophy. A good response will touch on their approach to hiring, developing talent, and fostering a high-performing culture. It should also provide insight into how they structure a finance department for efficiency and strategic partnership.
- What financial systems or tools have you implemented in the past? This gauges a candidate’s technical expertise and ability to scale financial operations. Their experience with modern systems like ERPs or analytics dashboards indicates their capacity to improve efficiency, enhance data accuracy, and provide the business with timely insights.
- How do you see the role of the CFO evolving with technology like AI and automation? This question shows a candidate’s forward-thinking mindset. An insightful answer will demonstrate an understanding of how technology can transform the finance function, from automating tasks to enabling more sophisticated forecasting. It shows they are prepared to lead the finance organization into the future.