Preview Questions Credit Analyst | Role Specific Skill

Question 1: What does an abnormally high accounts receivable turnover indicate?

Which action should you take?

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Tight credit policy

Reduced working capital

Overstated revenue

Poor collection policy

Question 2: What does the term "loan loss provision" mean in financial reporting?

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A reserve set aside to cover anticipated loan defaults

The value of collateral backing the loan

The total amount of interest paid on loans

A discount given on loans to increase borrower participation

Question 3: What is the benefit of adding covenants to a loan structure?

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Mitigate lender risk

Increase loan flexibility

Increase interest rates

Simplify documentation

Question 4: In credit scoring, what does Gini Coefficient measure?

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Default correlation

Accuracy of the model

Data completeness

Model discrimination ability

Question 5: Which type of market structure is least favorable for creditworthiness?

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Monopoly

Perfect competition

Monopolistic competition

Oligopoly

Question 6: How do industry cost curves assist in analyzing a borrower's competitiveness?

Which action should you take?

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Compare margins to industry peers

Assess production efficiency

Measure cost pass-through ability

Identify market expansion potential