American Express Credit Analyst Interview Questions and Answers

It was easy. Just basic Math and DI

Q1. How do you analyse liquidity of a company?
Ans. 
Analyzing liquidity involves assessing a company's ability to meet short-term financial obligations.
• Calculate current ratio (current assets / current liabilities)

• Assess quick ratio (liquid assets / current liabilities)

• Examine cash flow from operations to see if it covers short-term obligations

• Review working capital to determine if there are enough current assets to cover current liabilities
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Q2. Explain LTV and How to you analyse Home loan application?
Ans. 
LTV stands for Loan-to-Value ratio. Analyzing a home loan application involves assessing the borrower's creditworthiness and the property's value.
• LTV is calculated by dividing the loan amount by the appraised value of the property.

• A lower LTV ratio indicates a lower risk for the lender.

• Analyzing a home loan application involves reviewing the borrower's credit score, income, debt-to-income ratio, employment history, and...read more
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Q1. Formula regarding valuation DCF calculation formula Ratios formula and interpretation
Ans. 
Valuation formulas in credit analysis
• DCF calculation formula is used to estimate the value of an investment based on its future cash flows discounted back to present value

• Ratios formula includes Debt-to-Equity ratio, Current ratio, and Interest Coverage ratio to assess a company's financial health

• Interpretation of ratios involves comparing them to industry benchmarks and historical data
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Q1. Describe Financial Statement?
Ans. 
Financial statements are documents that provide information about the financial performance and position of a company.
• Financial statements include the balance sheet, income statement, cash flow statement, and statement of changes in equity.

• The balance sheet shows the company's assets, liabilities, and shareholders' equity at a specific point in time.

• The income statement shows the company's revenues, expenses, and profi...read more
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Q2. Tell me about yourself
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Q1. Tell me about yourself?
Ans. 
I am a detail-oriented Credit Risk Analyst with a strong background in financial analysis and risk assessment.
• I have a Bachelor's degree in Finance and several years of experience in the banking industry.

• I am skilled in analyzing credit reports, assessing financial statements, and identifying potential risks.

• I have a proven track record of making sound credit decisions and implementing risk mitigation strategies.

• I am p...read more
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Q2. Tell me about different classes of assets
Ans. 
Different classes of assets include fixed assets, current assets, intangible assets, and financial assets.
• Fixed assets: Tangible assets like property, plant, and equipment

• Current assets: Liquid assets like cash, accounts receivable, and inventory

• Intangible assets: Non-physical assets like patents, trademarks, and goodwill

• Financial assets: Investments like stocks, bonds, and derivatives
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Q1. Ratios to identify a healthy company
Ans. 
Healthy companies have high liquidity, profitability, and solvency ratios.
• Liquidity ratios measure a company's ability to meet short-term obligations. Examples include current ratio and quick ratio.

• Profitability ratios measure a company's ability to generate profits. Examples include return on assets and return on equity.

• Solvency ratios measure a company's ability to meet long-term obligations. Examples include debt-to...read more
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Q2. Is better to take loan or raise equity for a manufacturing company
Ans. 
It depends on the company's financial situation and goals.
• If the company has a strong credit history and cash flow, a loan may be a better option as it allows the company to maintain ownership and control.

• If the company is in a growth phase and needs more capital, raising equity may be a better option as it brings in new investors and can provide more flexibility in terms of repayment.

• Ultimately, the decision should be...read more
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Q1. Explain PD and LGD models
Ans. 
PD and LGD models are used in credit analysis to estimate the probability of default and loss given default.
• PD (Probability of Default) model estimates the likelihood of a borrower defaulting on a loan.

• LGD (Loss Given Default) model estimates the amount of loss a lender may incur if a borrower defaults.

• These models are used by credit analysts to assess credit risk and make informed lending decisions.

• PD models often use...read more
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Q2. What is the difference between Basel and IFRS9 norms
Ans. 
Basel norms focus on capital adequacy and risk management for banks, while IFRS9 norms focus on accounting standards for financial instruments.
• Basel norms are set by the Basel Committee on Banking Supervision to ensure banks maintain adequate capital to cover risks.

• IFRS9 norms are accounting standards set by the International Financial Reporting Standards Foundation to address classification and measurement of financia...read more
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Q1. General questions
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Q1. Why do you want to join
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It was easy. Just basic Math and DI

Q1. How do you analyse liquidity of a company?
Ans. 
Analyzing liquidity involves assessing a company's ability to meet short-term financial obligations.
• Calculate current ratio (current assets / current liabilities)

• Assess quick ratio (liquid assets / current liabilities)

• Examine cash flow from operations to see if it covers short-term obligations

• Review working capital to determine if there are enough current assets to cover current liabilities
Answered by AI
Add your answer
Q2. Explain LTV and How to you analyse Home loan application?
Ans. 
LTV stands for Loan-to-Value ratio. Analyzing a home loan application involves assessing the borrower's creditworthiness and the property's value.
• LTV is calculated by dividing the loan amount by the appraised value of the property.

• A lower LTV ratio indicates a lower risk for the lender.

• Analyzing a home loan application involves reviewing the borrower's credit score, income, debt-to-income ratio, employment history, and...read more
Answered by AI
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