Axis Bank Credit Manager Interview Questions, Process, and Tips

There are several methods for working capital funding, including bank loans, lines of credit, trade credit, factoring, and equity financing.

• Bank loans

• Lines of credit

• Trade credit

• Factoring

• Equity financing

Cash credit limit is a pre-approved limit extended by the bank for working capital needs, while overdraft limit is a facility to withdraw more than the available balance in the account.

• Cash credit limit is a revolving credit facility where interest is charged on the amount utilized, while overdraft limit is a short-term loan facility where interest is charged only on the amount overdrawn.

• Cash credit limit is typically ...read more

Negative working capital occurs when current liabilities exceed current assets.

• Occurs when a company's current liabilities exceed its current assets

• Indicates potential financial trouble or inefficiency in managing assets and liabilities

• Can lead to difficulties in paying off short-term obligations

• Common in industries with long cash conversion cycles, like retail or manufacturing

• Example: Company A has $100,000 in current...read more

Different ratios important for credit management include debt-to-equity ratio, current ratio, and debt service coverage ratio.

• Debt-to-equity ratio measures a company's financial leverage by comparing its total liabilities to shareholders' equity.

• Current ratio assesses a company's ability to cover its short-term liabilities with its short-term assets.

• Debt service coverage ratio evaluates a company's ability to meet its ...read more