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Technical interview question about Small Business Credit Analysis for Mid-Level Credit Analyst

What factors would you consider when analyzing the creditworthiness of a small business in the retail sector?

Credit Analyst

Technical

Asked at

Dun & Bradstreet

Difficulty :

Medium

Explanation

This question evaluates your ability to assess the creditworthiness of small businesses, particularly in the retail sector. Recruiters assess your understanding of financial metrics, industry risks, and the unique challenges faced by small businesses. Common pitfalls include focusing solely on financial statements without considering external factors like seasonality. A strong answer demonstrates a balanced approach, incorporating both quantitative and qualitative factors. Preparation involves studying credit evaluation techniques for small businesses.

Answer Example

I would start by analyzing the company’s financial statements, focusing on revenue trends, profit margins, and debt-to-equity ratios. Additionally, I would consider industry-specific risks, such as seasonality and market competition, and evaluate the management team’s experience. For example, I assessed a small retailer’s credit profile by analyzing their cash flow stability during peak seasons and recommending a revolving credit facility to manage off-season cash flow gaps.

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