Rating Analyst
Rating Analyst Interview Questions and Answers
Q1. What is DSCR and ISCR and what's the importance of it
DSCR stands for Debt Service Coverage Ratio and ISCR stands for Interest Service Coverage Ratio. They are financial ratios used to assess the ability of a borrower to meet their debt obligations.
DSCR measures the cash flow available to cover debt payments, while ISCR measures the cash flow available to cover interest payments.
Both ratios are important for lenders and investors to evaluate the creditworthiness and risk of a borrower.
A higher DSCR or ISCR indicates a stronger a...read more
Q2. How do you give credit rating to the company?
Credit rating is given based on the company's financial health, industry trends, and management quality.
Analyze financial statements and ratios to determine the company's ability to repay debt
Consider industry trends and competition to assess the company's market position
Evaluate management quality and corporate governance practices
Assign a rating based on the above factors, using a standardized rating scale
Example: A company with strong financials, a leading market position,...read more
Q3. Rating Methodology of different sectors, rating criteria, rating scale.
Rating methodology varies across sectors and criteria, using a standardized rating scale.
Each sector has its own unique rating methodology and criteria
Rating agencies use a standardized rating scale to rate entities within a sector
For example, in the financial sector, rating criteria may include financial strength and creditworthiness
In the healthcare sector, rating criteria may include patient outcomes and quality of care
The rating scale typically ranges from AAA (highest ra...read more
Q4. What is Credit Rating and what is its importance
Credit rating is an assessment of the creditworthiness of an individual, company, or government, indicating the likelihood of default.
Credit rating is a measure of the borrower's ability to repay debt.
It helps investors and lenders make informed decisions about lending money or investing in a particular entity.
Credit ratings are assigned by credit rating agencies based on various factors such as financial stability, past repayment history, and economic conditions.
Higher credi...read more
Q5. What is Tangible Net worth and how to calculate it
Tangible Net worth is the value of a company's assets minus its liabilities, excluding intangible assets.
Tangible Net worth = Total Assets - Total Liabilities
It represents the net value of a company's physical assets after deducting its debts.
Intangible assets like patents, trademarks, and goodwill are not included in the calculation.
Tangible Net worth is important for assessing a company's financial health and solvency.
Example: If a company has total assets worth $1 million ...read more
Q6. Credit Rating Process & Meaning. Credit Risk Evaluation
Credit rating process evaluates creditworthiness of an entity based on its financial history and future prospects.
Credit rating agencies analyze financial statements, industry trends, and economic conditions to assign a credit rating to an entity.
Credit ratings range from AAA (highest creditworthiness) to D (default).
Credit ratings help investors and lenders make informed decisions about the risk associated with investing or lending to an entity.
Credit risk evaluation involve...read more
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Q7. Key financials and non financial to consider while evaluating credit risk
Key financials and non-financial factors to consider when evaluating credit risk
Financial ratios such as debt-to-equity ratio, current ratio, and interest coverage ratio
Cash flow analysis to assess the company's ability to generate sufficient cash to meet its obligations
Credit history and payment behavior of the borrower
Industry and market conditions that may impact the borrower's ability to repay
Management quality and experience
Collateral or guarantees provided by the borrow...read more
Q8. Basel norms and its implications
Basel norms are a set of international banking regulations that aim to ensure financial stability.
Basel norms were first introduced in 1988 and have been updated several times since then.
The norms require banks to maintain a minimum level of capital adequacy to cover their risks.
The norms also set out guidelines for risk management and supervision.
Basel III, the latest version of the norms, was introduced in response to the 2008 financial crisis.
Basel III introduced stricter ...read more
Rating Analyst Jobs
Q9. Dscribe any industry
The technology industry is constantly evolving and driving innovation across various sectors.
Technology companies focus on developing software, hardware, and services to meet the needs of consumers and businesses.
Key players in the industry include Apple, Microsoft, Google, and Amazon.
Emerging technologies such as artificial intelligence, blockchain, and Internet of Things are shaping the future of the industry.
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