Preview Questions Credit Analyst | Role Specific Skill

Question 1: When interpreting the profitability ratios of a company, what would a decline in Return on Assets (ROA) suggest?

Which action should you take?

Choose only one option

A reduction in the company's debt obligations

An increase in the company's operational efficiency

A higher level of sales relative to its assets

A decrease in the company's ability to generate profits relative to its asset base

Question 2: Why is calculating the Collection Effectiveness Index (CEI) important?

Which action should you take?

Choose only one option

Ensures compliance with internal policies

Reduces delinquency rates

Tracks success of recovery initiatives

Improves allocation of resources

Question 3: Which of the following is the most critical factor when analyzing the competitive landscape of an industry for credit evaluation purposes?

Which action should you take?

Choose only one option

Regulatory environment and compliance

Operational efficiency and cost structures

Market share and customer concentration

Credit policies of competitors

Question 4: What does a declining Herfindahl-Hirschman Index (HHI) in an industry signify?

Which action should you take?

Choose only one option

Higher barriers to entry

Consolidation of market players

Reduced regulatory risks

Increasing competition

Question 5: If a financial statement shows increasing accounts payable days while accounts receivable days remain steady, what does this indicate?

Which action should you take?

Choose only one option

The company is collecting receivables too slowly, potentially affecting liquidity

The company is reducing its debt levels

The company may be delaying payments to suppliers to manage cash flow

The company is efficiently managing both receivables and payables

Question 6: How does the presence of a public record, such as bankruptcy, affect a borrower's credit score?

Which action should you take?

Choose only one option

It only affects the score if the bankruptcy occurred in the last two years

It has a temporary effect, and the score can recover over time

It significantly lowers the score and stays on the record for several years

It has no effect as it is considered an isolated incident