Sample interview questions: How do you assess the impact of supply chain disruptions on a borrower’s creditworthiness?
Sample answer:
Assessment of Supply Chain Disruptions on a Borrower’s Creditworthiness
Supply chain disruptions significantly impact a borrower’s creditworthiness by affecting key financial metrics and operational performance. Credit analysts assess the impact through the following steps:
1. Revenue Analysis:
* Examine the dependence on suppliers, manufacturers, and distributors within the disrupted supply chain.
* Assess potential revenue loss due to reduced production or late deliveries.
* Evaluate diversification of suppliers and potential alternative sourcing options.
2. Cost Analysis:
* Identify increased costs associated with supply chain disruptions, such as higher sourcing prices, transportation expenses, and inventory holding costs.
* Analyze the impact on profitability margins and operating expenses.
* Assess the ability to pass on increased costs to customers without losing market share.
3. Liquidity Assessment:
* Evaluate the impact on working capital due to delayed payments from customers or increased inventory levels.
* Assess the potential need for additional financing to cover cash flow gaps.
* Review liquidity ratios and cash flow projections to determine the borrower’s overall financial … Read full answer