How Depreciation Hits the 3 Statements: PJT 2027 Interview Prep
"How does $10 of depreciation flow through the 3 statements?" is the classic trap behind the depreciation 3 statements interview question at PJT. It sounds like first-week accounting — which is exactly why interviewers love it. Candidates who memorized definitions but never traced the mechanics get the numbers wrong, and getting it wrong signals your whole technical foundation is shaky.
The Correct Answer to the Depreciation 3 Statements Interview Question
Here's the clean version of the depreciation 3 statements interview question PJT expects: on the income statement, depreciation of $10 reduces pre-tax income by $10, so net income falls by $10 × (1 – tax rate) — say $6 at a 40% tax rate. On the cash flow statement, net income is down $6 but you add back the $10 non-cash charge, so cash rises by $4. On the balance sheet, PP&E falls by $10 (accumulated depreciation), cash rises $4, and retained earnings falls $6 — it balances.
Why PJT Loves the Depreciation 3 Statements Interview Question
The depreciation 3 statements interview question tests whether you truly understand the statements as a linked system or just memorized phrases. PJT interviewers use it as a follow-up to "walk me through the 3 financial statements" — nail the walkthrough and they'll probe here to confirm depth. It's also the gateway to harder variants: capex, amortization, deferred taxes, working capital. One wrong number and the interviewer's confidence in you drops.
How to Make the Depreciation 3 Statements Interview Answer Automatic
- Always state the tax assumption. "Assuming a 40% tax rate" shows rigor and buys thinking time.
- Trace all three statements every time. Never stop at the income statement — the linkages are the point.
- Drill every variant. Our 2027 PJT Partners Online Assessment Exact Questions & Answers pack covers the full depreciation question family PJT asks — with capex, partial-year, and tax-shield twists — and the exact answers.
- Say it out loud, timed. Under 60 seconds, no hesitation, no "um."
The Simplest Question Cuts the Deepest
FOMO: nobody gets rejected at PJT for missing an exotic LBO nuance — they get rejected for fumbling depreciation. It's embarrassing precisely because it's basic, and interviewers remember embarrassment. Lock it down.
FAQ
What tax rate should I assume? State one explicitly — 30–40% is standard; the assumption matters more than the number.
Why does cash go up when depreciation is an expense? Because it's non-cash: the tax shield saves real cash while no cash leaves the business.
What are the common follow-ups? Capex vs. depreciation, amortization of intangibles, and deferred tax assets.
Is this asked at every PJT interview? It's among the most common accounting follow-ups — treat it as near-guaranteed.
Preparing for PJT Partners' Accounting Technical? Our 2027 PJT Partners Online Assessment Exact Questions & Answers has the exact questions and answers — $79 one-time, instant download.
