NTT Data Interview Questions and Answers

Operating cycle and working capital cycle are measures of a company's efficiency in managing its cash flow.

• Operating cycle is the time it takes for a company to convert its inventory into cash. It is calculated as the sum of the inventory holding period and the accounts receivable collection period.

• Working capital cycle is the time it takes for a company to convert its current assets into cash to meet its current liabilities. It is calculated as the sum of the operating cycle...read more

Current Ratio is a financial ratio that measures a company's ability to pay its short-term liabilities with its short-term assets.

• Current Ratio = Current Assets / Current Liabilities

• It indicates the liquidity of a company

• A higher current ratio is generally considered better

• Standard current ratio varies by industry

• For example, a current ratio of 2:1 is considered good for most industries

DSCR is Debt Service Coverage Ratio, a measure of a company's ability to repay its debt. It is calculated by dividing net operating income by total debt service.

• DSCR is a financial ratio used by lenders to assess the creditworthiness of a borrower.

• It measures the cash flow available to cover debt payments.

• The formula for DSCR is: DSCR = Net Operating Income / Total Debt Service.

• A higher DSCR indicates a better ability to repay debt.

• An ideal DSCR ratio varies depending on the ...read more

The repayment capacity of the borrower is the most important yardstick in assessment of Term Loan.

• Repayment capacity of the borrower is assessed through various financial ratios such as Debt Service Coverage Ratio (DSCR), Interest Coverage Ratio (ICR), and Loan to Value Ratio (LTV).

• The borrower's credit history, income, and assets are also considered in the assessment.

• The purpose of the loan, the industry in which the borrower operates, and the economic conditions of the coun...read more

Debt service coverage ratio measures a company's ability to pay its debt obligations. Interest coverage ratio measures a company's ability to pay interest on its debt.

• Debt service coverage ratio is calculated by dividing a company's net operating income by its total debt service.

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

• Interest coverage ratio is calculated by dividing a company's earnings before interest and tax...read more

The tools of credit analysis include financial statements, credit reports, credit scoring models, and industry research.

• Financial statements provide information on a company's financial health and performance.

• Credit reports show a borrower's credit history and payment behavior.

• Credit scoring models use data from credit reports to assess creditworthiness.

• Industry research helps to understand the borrower's market and competition.

• Other tools include cash flow analysis, collater...read more

I was previously a Credit Analyst. Current ratio measures a company's ability to pay its short-term obligations, while DSCR measures a company's ability to cover its debt payments.

• Current ratio is calculated by dividing current assets by current liabilities. A ratio above 1 indicates the company can cover its short-term obligations.

• DSCR (Debt Service Coverage Ratio) is calculated by dividing a company's operating income by its debt payments. A ratio above 1 indicates the comp...read more

Negative cash flow scenarios include high expenses, low sales, delayed payments, and economic downturns.

• High expenses exceeding revenue

• Low sales leading to decreased cash inflow

• Delayed payments from customers affecting cash flow

• Economic downturn impacting overall business performance