Accounting · Financial Statement Analysis
Credit Ratio Categories
This problem asks you to identify the two main categories of credit ratios used to assess default risk.
Interview question
- Difficulty
- Easy
- Topic
- Accounting
- Subtopic
- Financial Statement Analysis
What this question trains
This question tests whether you understand how analysts evaluate a company’s credit profile from its financial statements. In investment banking interviews, interviewers often want to see that you can distinguish between ratios that measure debt burden, such as leverage, and ratios that measure the ability to service that debt through earnings or cash flow, such as interest coverage. The key skill is knowing what each ratio is trying to reveal about risk and why lenders care about both the size of the obligation and the company’s capacity to pay it.