📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

  • google app store apple app store

    • Question

      A borrower shows Net Profit of ₹20 crore for the year.

      However, operating cash flow is only ₹2 crore due to sharp increase in receivables and inventory. Debt obligations next year are ₹15 crore. What is the most critical credit inference?
      A Profitability is strong Correct Answer Incorrect Answer
      B Accounting policy is conservative Correct Answer Incorrect Answer
      C Serious liquidity stress despite profits Correct Answer Incorrect Answer
      D High tax burden is the issue Correct Answer Incorrect Answer
      E Temporary seasonal effect Correct Answer Incorrect Answer

      Solution

      High profit but weak cash flow → inability to service debt → liquidity risk.

      Practice Next
      ask-question