Morningstar Senior Research Associate 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 inc...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

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 compa...read more

Short-term solvency ratios used to assess a company's ability to meet its fixed charge obligations.

• Fixed Charge Service Ratio (FCSR) measures the ability of a company to meet its fixed charge obligations such as interest and lease payments.

• Weighted Average Cost of Capital (WACC) is the average cost of all the capital a company has raised and is used to evaluate investment opportunities.

• Adjusted EBITDA (Earnings Before ...read more