Tell me some Liquidity and Coverage ratios?
Liquidity - Current ratio; Quick Ratio; Cash Ratios Liquidity Ratios A company with adequate liquidity will have enough cash available to pay its ongoing bills in the short run. Here…
Difference between solvency and liquidity?
Solvency is defined as the firm’s potential to carry on business activities in the foreseeable future, to expand and grow. It is the measure of the company’s capability to fulfil…
What is CAGR? Should CAGR be high or low?
● The compound annual growth rate (CAGR) is the rate of return that would be required for an investment to grow from its beginning balance to its ending balance, assuming…
What is the difference between Quick Ratio and Current Ratio?
The inclusion of inventory in Current Ratio and its exclusion from the Quick Ratio is the key difference between the two.
What is working capital? How will you calculate it?
Working capital is the excess of current assets over current liabilities. In other words, it is the money invested in those assets of a business which are intended to be…
What is net worth of a company?
Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is…
What are the important responsibilities of a Credit Analyst?
Your answer to this question, tells the interviewer, if you are aware of the responsibilities you’ll need to perform in this role, your capability, readiness, and commitment. Make sure that…
EXPLAIN DURATION GAP ANALYSIS MODEL ?
Duration is an important measure of the interest rate sensitivity of assets and liabilities as it takes into account the time of arrival of cash flows and the maturity of…
LIST THE BASIC ASSET LIABILITY MANAGEMENT (ALM) MODELS?
Analytical models are very important for ALM analysis and scientific decision making. The basic models are as follows: (a) GAP Analysis Model (b) Duration GAP Analysis Model (c) Scenario Analysis…
EXPLAIN GAP ANALYSIS MODEL ?
Gap analysis model measures the direction and extent of asset-liability mismatch through either funding or maturity gap. It is computed for assets and liabilities of differing maturities and is calculated…
DISCUSS THE ROLE AND FUNCTIONS OF ASSET LIABLITY MANAGEMENT COMMITTEE
The Asset - Liability Committee (ALCO) consisting of the bank's senior management including CEO should be responsible for ensuring adherence to the limits set by the Board as well as…
ENUMERATE THE THREE REST PILLARS OF ALM PROCESS AS PER RBI GUIDELINES ?
As per the RBI Guidelines on Asset Liability Management (ALM) System, the ALM process rests on following three pillars: (i) ALM Information Systems • Management Information Systems • Information availability,…
DEFINE ASSET LIABILITY MANAGEMENT (ALM)?
Asset Liability Management (ALM) defines management of all assets and liabilities (both off and on balance sheet items) of a bank. It requires assessment of various types of risks and…
RBI GUIDELINES FOR VALUATION OF AVAILABLE FOR SALE
Available for sale (i) The individual scrips in the Available for Sale category will be marked to market at quarterly or at more frequent intervals. (ii) While the net depreciation…
RBI GUIDELINES FOR VALUATION OF HELD FOR TRADING
Held for Trading category The individual scrips in the Held for Trading category will be revalued at monthly or at more frequent intervals and provided for as in the case…
RBI GUIDELINES FOR VALUATION OF HELD TO MATURITY
Held to maturity i) Investments classified under Held to Maturity category need not be marked to market and will be carried at acquisition cost, unless it is more than the…
EXPLAIN THE CLASSIFICATION OF INVESTMENT PORTFOLIO OF THE BANKS?
The entire investment portfolio of the banks should be classified under three categories (a) Held to Maturity (b) Available for Sale and (c) Held for Trading. However, in the balance…
What is working capital and what is net working capital?
Working capital is the amount of a company's current assets minus the amount of its current liabilities. The adequacy of a company's working capital depends on the industry in which…
What is an Ideal leverage ratio?
A figure of 0.5 or less is ideal. In other words, no more than half of the company's assets should be financed by debt. Alternatively, some suggest a 2:1 Debt…
How do you model working capital for a company?
There are three core components of working capital – accounts receivable, inventories, and accounts payable. These items are usually modeled to match what is happening with revenues and cost of…
Explain leverage ratio and solvency ratio
A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt (loans) or assesses the ability of a company…