10+ India Ratings & Research Interview Questions and Answers

DSCR stands for Debt Service Coverage Ratio. Pre-tax amount is used in the calculation to ensure that the borrower has enough income to cover their debt obligations.

• DSCR is a financial ratio used to determine if a borrower has enough income to cover their debt obligations

• It is calculated by dividing the borrower's pre-tax income by their total debt service

• A DSCR of 1 or higher indicates that the borrower has enough income to cover their debt obligations

• Pre-tax amount is used ...read more

Exponential increase in turnover can be analyzed by identifying the factors contributing to the increase and projecting future growth.

• Identify the source of the increase (e.g. new product launch, market expansion)

• Analyze customer behavior and purchasing patterns

• Evaluate competition and market trends

• Use statistical models to project future growth

• Consider potential challenges and risks to sustained growth

To analyse credit worthiness of a company, various financial ratios and credit scores are used.

• Check the company's credit score and credit history

• Analyze the company's financial statements and ratios such as debt-to-equity ratio, current ratio, and interest coverage ratio

• Evaluate the company's industry and market trends

• Assess the company's management and leadership

• Consider any external factors that may affect the company's credit worthiness, such as economic conditions and re...read more

ROCE formula and inclusion of short term loans in calculation

• ROCE formula is (Operating Profit / Capital Employed) x 100

• Capital Employed includes all long-term and short-term assets minus short-term liabilities

• Short-term loans are included in the calculation of capital employed

• ROCE is a measure of how efficiently a company is using its capital to generate profits

The approach to rating an NBFC with a manufacturing parent involves analyzing the parent's financial strength and the NBFC's business model.

• Assess the parent company's creditworthiness and financial stability

• Evaluate the NBFC's business model and its relationship with the parent company

• Analyze the NBFC's risk management practices and regulatory compliance

• Consider the industry and market conditions in which the NBFC operates

• Look at the NBFC's financial performance and projecti...read more

Cash Flow Statement is a financial statement that shows the inflow and outflow of cash in a business.

• It shows the sources of cash inflow and the uses of cash outflow.

• It is divided into three sections: operating activities, investing activities, and financing activities.

• It helps in analyzing the liquidity and solvency of a business.

• Example: If a company has a negative cash flow from operating activities, it may indicate that the company is not generating enough cash from its c...read more

Credit worthiness refers to a borrower's ability to repay a loan. Working capital management is the process of managing a company's short-term assets and liabilities.

• Credit worthiness is determined by factors such as credit score, income, and debt-to-income ratio.

• Lenders use credit worthiness to assess the risk of lending money to a borrower.

• Working capital management involves managing a company's cash, inventory, and accounts receivable to ensure it has enough liquidity to m...read more

Fundamental analysis of credit involves evaluating the financial health of a borrower to determine their creditworthiness.

• Assessing the borrower's income, expenses, assets, and liabilities

• Analyzing the borrower's credit history and credit score

• Evaluating the borrower's ability to repay the loan

• Examining the borrower's industry and market trends

• Considering macroeconomic factors that may impact the borrower's ability to repay

• Example: analyzing a company's financial statements t...read more

Risk drivers in NBFCs

• Lack of diversification in loan portfolio

• Dependency on short-term funding sources

• Inadequate risk management practices

• Exposure to external factors such as economic downturns

• Lack of regulatory oversight

• Fraudulent activities by employees or borrowers

The location and expected CTC will depend on the specific job opening.

• The location will be determined by the company's needs and may vary depending on the job opening.

• The expected CTC will also depend on the job opening and the candidate's qualifications.

• It is best to discuss specific location and salary details during the interview process.