1) What are the 5 c of credit analysis?

= The 5 Cs of Credit Analysis are key factors that lenders and financial institutions evaluate when
assessing a borrower’s creditworthiness. These factors help determine the likelihood of loan
repayment and the level of risk involved. The 5 Cs are:

 Character (Credit History & Trustworthiness) = Character refers to the borrower’s

trustworthiness, integrity, and reputation in repaying debts.
Assessment Criteria = Credit history, financial background (Past default & bankruptcies),
Reputation & reference
 Capacity (Ability to Repay) = Capacity evaluates the borrower’s ability to repay the loan
based on their income and financial obligations.
Assessment Criteria = Debt-to-Income Ratio (DTI), Cash Flow Analysis, Employment Stability
 Capital (Investment by the Borrower) = Capital refers to the borrower’s financial
commitment or personal investment in the venture they are borrowing for.
Assessment Criteria = Down Payment, Saving & Assets, Business Investment
 Collateral (Secured Asset) = Collateral is an asset pledged by the borrower to secure a loan,
reducing the lender’s risk.
Assessment Criteria = Value of collateral, Loan to Value Ratio (80% or below is better),
Ownership & Legal Clearances
 Conditions (Economic & Industry Factors) = Conditions refer to external factors that may
affect a borrower’s ability to repay the loan, such as economic trends and industry stability.
Assessment Criteria = Interest Rates & Inflation, Industry Health, Loan Purpose

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1.1) What are the loan life cycle in an australian mortgage company?

= 1. Loan Application

 Role of Credit Analyst:

o Review the borrower’s application, which includes financial statements, income
verification, credit reports, and property details.
o Assess eligibility based on the company's lending criteria (e.g., credit score,
debt-to-income ratio, loan-to-value ratio).

2. Pre-Approval / Initial Assessment

 Role of Credit Analyst:

o Conduct initial risk assessments using the applicant's financial profile.
o Perform financial analysis of the borrower’s ability to repay, considering factors
like income stability and existing debt.
o Approve or recommend modifications to the loan amount, interest rate, or terms
based on the risk evaluation.
3. Verification and Due Diligence

 Role of Credit Analyst:

o Conduct in-depth due diligence, including verification of income, assets, and
employment.
o Ensure compliance with regulatory requirements (e.g., responsible lending
obligations under the National Consumer Credit Protection Act).
o Assess the property’s value via an appraisal and ensure it meets the company’s
lending guidelines.

4. Loan Offer

 Role of Credit Analyst:

o Confirm the terms of the loan, ensuring the interest rates, repayment schedules,
and fees align with the company’s guidelines and the borrower’s profile.
o Issue the loan offer after completing the due diligence and risk analysis.

5. Loan Settlement

 Role of Credit Analyst:

o Ensure all conditions precedent (e.g., insurance, title registration) are met before
the loan is disbursed.
o Work with legal and operational teams to confirm final approval and
disbursement of funds.

6. Loan Monitoring and Ongoing Risk Management

 Role of Credit Analyst:

o Continuously monitor the loan’s performance, checking for any delinquencies
or changes in the borrower’s financial situation.
o Perform periodic risk assessments and collaborate with collections or arrears
management teams if needed.

7. Loan Repayment / Closing

 Role of Credit Analyst:

o Ensure the loan is repaid according to the agreed-upon terms.
o Review the final balance, close the loan, and ensure proper documentation is
completed.
 2) When considering whether to lend to a company what would you analyse?

= I would look at various aspect of a company in line with the operating procedure set by my
employer.

I would look at financial statements over the years including Income statement, balance sheet,
profit loss, cash flow. Also, I would assess the company’s assets to see which could be used as
security.
I would assess the interest coverage ratio to make sure they can pay the debt in time.

3) What is meant by interest coverage ratio?

= The interest coverage ratio is the ability to pay the interest with its available earnings. We calculate
the interest coverage ratio by dividing EBIT by the interest expenses for the same period. So for eg, if a
company has EBIT of 1,00,000 & has interest expenses of 20,000 then the interest coverage ratio is 5.
A higher ratio is more acceptable from a risk perspective.

4) What are the different types of credit analysis ratios?

= Current Ratio = Current Assets / Current Liabilities

 Measures the ability to pay short-term liabilities with current assets.

 A ratio above 1 indicates sufficient liquidity.
 Example: A current ratio of 2.0 means the borrower has twice the current assets to cover
current liabilities.

 Debt-to-Equity Ratio (D/E) = Total Debt / Total Equity

 Measures the proportion of debt used to finance the company compared to equity.
 A high ratio suggests high financial risk.

 Debt-to-Assets Ratio = Total Debt / Total Assets

 Indicates the percentage of total assets financed by debt.

 Interest Coverage Ratio = EBIT / Interest Expense

 Shows how easily a company can cover interest payments with its earnings before
interest and taxes (EBIT).
 A ratio above 2.0 is generally considered safe.

 Fixed Charge Coverage Ratio = (EBIT + Fixed Charges) / (Fixed Charges + Interest
Expense)
  Measures the ability to cover fixed costs, including lease obligations.

 Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue

 Measures profitability after deducting production costs.

 Net Profit Margin = Net Income / Revenue

 Measures how much profit is retained from each dollar of sales.

 Return on Assets (ROA) = Net Income / Total Assets

 Shows how efficiently assets generate profits.

 Return on Equity (ROE) = Net Income / Shareholders' Equity

 Measures profitability from shareholders’ investments.

 Debt Service Coverage Ratio (DSCR) = Net Operating Income / Total Debt Service
o Measures the ability to cover debt obligations with operating income.
o A DSCR above 1.25 is preferred by lenders.
 Loan-to-Value Ratio (LTV) = Loan Amount / Collateral Value
o Used for secured loans to assess the risk of lending.
o A lower ratio (e.g., below 80%) is considered lower risk.

5) How would you ensure the data in credit analysis report is accurate?

 Verify Data Sources – Use reliable documents (bank statements, tax returns) and cross-
check with external sources.
 Check Consistency – Ensure financial details match across documents and look for
discrepancies.
 Recalculate Key Ratios – Validate debt-to-income, credit utilization, and other financial
metrics.
 Detect Fraud – Identify red flags (altered documents, inflated income) and use fraud
detection tools.
 Regular Updates – Keep financial records current and monitor credit changes over time.
 Regulatory Compliance – Follow legal and industry standards (e.g., IFRS, Basel III).
 Use Technology – Implement credit risk software, AI models, and automation to reduce
errors.

6) If i ask you to use only one metric to assess financial health of a company what it would be and
why?
= If I had to use only one metric to assess a company's financial health, I would choose the Debt
Service Coverage Ratio (DSCR).
DSCR = Net Operating Income / Total Debt Service = EBIT/Total Debt Services

1. Measures Debt Repayment Ability – It shows whether a company generates enough

income to cover its debt obligations.
2. Covers Liquidity & Solvency – Unlike profitability metrics, DSCR ensures the
company has cash flow to sustain operations and meet financial commitments.
3. Used by Lenders & Investors – A DSCR above 1.25 is typically required for loans,
making it a key indicator of creditworthiness.
4. More Reliable than Profitability Ratios – Even profitable firms can struggle with debt;
DSCR ensures financial stability.

If DSCR < 1, the company might struggle to pay its debts, raising red flags about its financial
health.

7) What are the most important skills to be a credit analyst?

= To be a successful credit analyst, you need:

1. Financial Analysis – Strong understanding of financial statements, ratios, and cash flow
analysis.
2. Risk Assessment – Ability to evaluate credit risk and detect potential defaults.
3. Attention to Detail – Spotting discrepancies in financial data and reports.
4. Analytical Thinking – Interpreting complex data to make sound credit decisions.
5. Industry Knowledge – Understanding economic trends and sector-specific risks.
6. Regulatory Compliance – Knowledge of banking laws, IFRS, and Basel guidelines.
7. Communication Skills – Presenting findings clearly to stakeholders and clients

7) A long standing & loyal business customer wants a large loan but your credit assessment says it's
not safe. What would you do?

= If a long-standing and loyal business customer requests a large loan, but the credit
assessment indicates high risk, I would take the following approach:

1. Communicate Transparently – Explain the credit concerns based on financial analysis

while maintaining a positive relationship.
2. Explore Alternative Financing – Suggest a lower loan amount, collateral-backed
loan, or structured repayment terms to reduce risk.
 Follow Credit Policy & Compliance – Ensure the decision aligns with risk management guidelines to
avoid bad debt.

8) Whats your approach to risk?

= My approach to risk is balanced and analytical, focusing on identifying, assessing, and

mitigating risks while maximizing opportunities.

Key Principles:

1. Risk-Aware, Not Risk-Averse – Taking calculated risks rather than avoiding them
entirely.
2. Data-Driven Decisions – Using financial analysis, risk models, and market trends to
make informed choices.
3. Mitigation First – Identifying potential risks early and applying controls (e.g.,
diversification, hedging, collateral).
4. Compliance & Ethics – Ensuring decisions align with regulations and ethical
standards to avoid legal or reputational damage.
5. Scenario Planning – Preparing for best-case, worst-case, and most-likely outcomes
before making commitments.
6. Continuous Monitoring – Regularly tracking risk exposure and adjusting strategies
accordingly.

🔹 Bottom Line: Smart risk-taking drives success, but only when backed by strong analysis,
mitigation strategies, and regulatory compliance.

9) Do you think working late is a good or a bad thing?

= Whether working late is good or bad depends on the context and balance in an individual's
work-life situation.

Good Aspects:

1. Productivity – It can be helpful when deadlines are tight or when you're in a flow state.
2. Career Progression – Occasional extra hours can demonstrate commitment and lead to
recognition.
3. Learning & Growth – Sometimes, working late allows for focusing on skill
development or tackling complex tasks.

Bad Aspects:

1. Work-Life Balance – Consistent late hours can lead to burnout, stress, and harm
relationships.
 2. Health Issues – Long work hours, especially without breaks, can negatively affect
mental and physical health.
3. Decreased Productivity – Over time, working late can result in fatigue, reducing the
quality of work.

Conclusion:

Working late occasionally can be beneficial, but sustainable success comes from maintaining
balance, prioritizing efficiency, and knowing when to disconnect.

10) Why do you want to switch the job from Accountant to credit analyst?

= "I am looking to transition from an Accountant to a Credit Analyst because I am excited about
the opportunity to expand my expertise into the field of credit risk management. As an
Accountant, I have developed strong skills in financial analysis, reporting, and compliance,
and I believe these skills will be valuable in assessing creditworthiness and evaluating financial
risks. I am particularly interested in the dynamic nature of credit analysis, where I can work
directly with clients, assess their financial health, and make data-driven decisions that influence
lending. This role aligns with my long-term career goals of building a deeper understanding of
financial markets, risk assessment, and client-facing decision-making, and I am eager to
contribute my skills in a more strategic and analytical capacity."

This answer highlights a clear interest in career growth, how accounting experience transfers
to the new role, and a focus on expanding knowledge in financial analysis.

11) Do you have any question you would like to ask to a panel?

= How does the company balance between risk management and fostering strong client relationships,
especially with long-standing clients?
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1) Salutation = Dear Mr. Last name
2) Opening Sentence = I hope this email finds you well.
3) Body = I am reaching you about
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Discussion

Work from Home provides flexibility, increased productivity, and better work-life balance. It reduces
the stress of commuting, creates an environment where employees can work at their most efficient, and
supports overall health and safety. As a result, WFH is a highly attractive option for both employees and
employers looking to create a modern, adaptable, and efficient workforce.

Advantages of Work from Home (WFH):

1. Enhanced Work-Life Balance:

o WFH offers employees the flexibility to manage their personal and
professional lives more effectively. With no commute, employees can allocate
more time for family, hobbies, or self-care, contributing to improved overall
well-being.
2. Increased Productivity and Focus:
o Many employees find they are more productive working from home due to fewer
distractions from coworkers or office noise. They can create a work environment
tailored to their preferences, leading to higher concentration and better task
completion.
3. Time and Cost Savings:
o By eliminating daily commuting, employees save significant amounts of time and
money on transportation costs. This also results in reduced stress associated with
long commutes, leading to a more positive mental state.
4. Flexible Working Hours:
o WFH typically allows for flexible hours, enabling employees to work when they
feel most productive. This can be particularly beneficial for those who prefer
working at their own pace, or have family commitments and personal needs.
5. Health and Safety:
o During times of health crises or pandemics, working from home ensures
employees are shielded from potential risks. It also allows individuals to better
manage their physical and mental health, with fewer concerns about office
exposure or stress.
6. Environmental Impact:
o Working from home reduces the carbon footprint as fewer employees are
commuting daily. This contributes to a greener environment and aligns with
sustainability goals.
7. Autonomy and Control:
 o WFH allows employees to have greater control over their workspace, daily
routines, and schedules. This sense of autonomy can foster a more positive and
self-driven work culture.
8. Broader Talent Pool:
o With the ability to work remotely, companies can access a wider range of talent,
regardless of geographical limitations. This allows them to hire individuals with
specialized skills from any location, resulting in more diverse and skilled teams.