10+ ICICI Bank Credit Manager Interview Questions and Answers for Freshers

Ideal debt equity ratio varies by industry and company, but generally ranges from 0.5 to 2.

• Debt equity ratio is a measure of a company's financial leverage.

• It compares a company's total debt to its total equity.

• A higher debt equity ratio indicates higher financial risk.

• Ideal debt equity ratio varies by industry and company, but generally ranges from 0.5 to 2.

• For example, a technology company may have a higher debt equity ratio than a utility company.

• Credit appraisal is the pr...read more

The recent budget focuses on healthcare, infrastructure, and digitalization.

• Increased allocation for healthcare sector

• Focus on building new highways and railways

• Investment in digital infrastructure

• Reduction in customs duty on certain products

• Introduction of new tax regime for small businesses

Components of balance sheet include assets, liabilities, and equity.

• Assets: resources owned by the company such as cash, inventory, and property

• Liabilities: debts owed by the company such as loans and accounts payable

• Equity: the residual interest in the assets of the company after liabilities are deducted

• Examples: cash, accounts receivable, inventory, accounts payable, long-term debt, common stock, retained earnings

Working capital can be financed through various methods.

• Short-term loans from banks or financial institutions

• Trade credit from suppliers

• Factoring or invoice discounting

• Inventory financing

• Receivables financing

• Crowdfunding or peer-to-peer lending

• Sale of assets

• Equity financing

• Leasing or renting of equipment

• Negotiating extended payment terms with customers

CRR stands for Cash Reserve Ratio, SLR stands for Statutory Liquidity Ratio, repo rate is the rate at which the central bank lends money to commercial banks, and reverse repo rate is the rate at which the central bank borrows money from commercial banks.

• CRR is currently at 4%

• SLR is currently at 18.25%

• Repo rate is currently at 4%

• Reverse repo rate is currently at 3.35%

DSCR stands for Debt Service Coverage Ratio. It signifies a company's ability to pay its debts.

• DSCR is a financial ratio that measures a company's ability to pay its debts based on its cash flow.

• It is calculated by dividing the company's net operating income by its total debt service.

• A DSCR of 1 or higher indicates that the company is generating enough cash flow to cover its debt obligations.

• A DSCR below 1 indicates that the company may have difficulty meeting its debt obliga...read more

Working capital is the difference between current assets and current liabilities.

• Working capital is the amount of money a company has available to fund its day-to-day operations.

• It is calculated by subtracting current liabilities from current assets.

• Positive working capital means a company has enough funds to cover its short-term obligations.

• Negative working capital means a company may struggle to pay its bills on time.

• Examples of current assets include cash, inventory, and a...read more

Working capital can be calculated using various methods.

• The Current Ratio method compares current assets to current liabilities.

• The Quick Ratio method excludes inventory from current assets.

• The Operating Cycle method considers the time it takes to convert inventory into cash.

• The Cash Conversion Cycle method combines the operating cycle with the time it takes to collect receivables.

• The Gross Working Capital method calculates the total current assets.

• The Net Working Capital met...read more

Liquidity ratios measure a company's ability to meet short-term obligations.

• Current ratio: current assets divided by current liabilities

• Quick ratio: (current assets - inventory) divided by current liabilities

• Cash ratio: cash and cash equivalents divided by current liabilities

• Operating cash flow ratio: operating cash flow divided by current liabilities

• Net working capital ratio: current assets minus current liabilities

• Accounts receivable turnover ratio: net credit sales divided...read more

Credit managers are responsible for overseeing the credit granting process, managing credit risk, and ensuring customers pay on time.

• Evaluate credit applications and determine credit limits

• Monitor customer accounts and ensure timely payments

• Manage relationships with credit reporting agencies and collection agencies

• Develop and implement credit policies and procedures

• Analyze financial data to assess creditworthiness

• Negotiate payment terms with customers

Working capital cycle is calculated by adding the number of days it takes to sell inventory, the number of days it takes to collect receivables, and subtracting the number of days it takes to pay suppliers.

• Calculate average inventory turnover ratio by dividing cost of goods sold by average inventory.

• Calculate average collection period by dividing accounts receivable by average daily credit sales.

• Calculate average payment period by dividing accounts payable by average daily cr...read more

OD stands for Overdraft and CC stands for Cash Credit.

• OD is a facility provided by banks to withdraw more than the available balance in the account, up to a certain limit.

• Interest is charged on the amount overdrawn.

• CC is a type of loan where the borrower can withdraw funds up to a certain limit, and interest is charged only on the amount withdrawn.

• CC is usually given to businesses to manage their working capital needs.