This question tests whether you understand the basic accounting system behind financial analysis and valuation. Bankers use the three statements to assess a company’s profitability, cash generation, financial position, and ability to service debt. More advanced topics such as enterprise value, leveraged buyouts, and merger models become much harder if you cannot explain how the statements connect. The links are the test.
The interviewer usually wants a concise overview, not a line-by-line accounting lecture. Your answer should identify what each statement measures, explain the order in which the statements connect, and show that the balance sheet remains balanced. A polished initial response normally takes about 60 to 90 seconds, although the interviewer may then ask detailed follow-ups.