Acuity Knowledge Partners Interview Questions, Process, and Tips

Q1. What is DSCR? and how is it calculated
Ans. 
DSCR stands for Debt Service Coverage Ratio, a financial metric used to evaluate a company's ability to pay its debts.
• DSCR is calculated by dividing a company's operating income by its total debt service obligations.

• A DSCR of 1 or higher indicates that a company is generating enough income to cover its debt payments.

• For example, if a company has an operating income of $500,000 and total debt service obligations of $400
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Q2. Leverage Ratio. Impact of it in assessing creditworthiness
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Leverage ratio is a financial metric used to assess a company's creditworthiness by measuring its debt relative to its equity.
• Leverage ratio compares a company's debt to its equity, indicating its ability to meet financial obligations

• Higher leverage ratios suggest higher financial risk and lower creditworthiness

• Lower leverage ratios indicate a stronger financial position and higher creditworthiness

• Investors and credito...read more
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Q1. Explain DCF model
Ans. 
DCF model is a valuation method used to estimate the value of an investment based on its expected future cash flows.
• Discounted Cash Flow (DCF) model calculates the present value of expected future cash flows by discounting them back to their present value.

• It involves forecasting future cash flows, determining a discount rate, and calculating the net present value.

• The formula for DCF is: DCF = CF1/(1+r)^1 + CF2/(1+r)^2 ...read more
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Q2. 3 financial statements
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Q1. What are liquity, activity and solvency ratios
Ans. 
Liquity, activity, and solvency ratios are financial metrics used to assess a company's financial health and performance.
• Liquity ratios measure a company's ability to meet short-term obligations using its liquid assets. Examples include current ratio and quick ratio.

• Activity ratios assess how efficiently a company is using its assets to generate revenue. Examples include inventory turnover ratio and accounts receivable...read more
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Q2. What are operating, investing and financing activities
Ans. 
Operating, investing, and financing activities are three categories used in financial reporting to classify the cash flows of a business.
• Operating activities involve the day-to-day operations of the business, such as sales, production, and expenses.

• Investing activities include the purchase and sale of long-term assets, such as property, equipment, and investments.

• Financing activities involve raising capital through deb...read more
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Q3. How to improve decreasing working capital
Ans. 
Improving decreasing working capital involves managing inventory, accounts receivable, and accounts payable effectively.
• Optimize inventory levels to reduce excess stock and free up cash

• Implement efficient accounts receivable processes to shorten payment cycles

• Negotiate longer payment terms with suppliers to improve cash flow

• Monitor and analyze cash flow regularly to identify areas for improvement
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Q1. Introduction about oneself
Ans. 
I am a dedicated and hardworking individual with a passion for learning and growth.
• I have a Bachelor's degree in Business Administration

• I have 3 years of experience in marketing and sales

• I am proficient in Microsoft Office Suite and CRM software

• I am a team player and enjoy collaborating with others

• I am always looking for opportunities to expand my skills and knowledge
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Q1. Financial ratios
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Q2. Dcf fcf NPV IRR EBITDA
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Q1. Analytical questions
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Q2. EV EBITDA wACC CAPM
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