medium · Corporate Credit Analysis fsa
An analyst identifies that a borrower's Days Sales Outstanding (DSO) has stretched from 40 to 55 days over three quarters while revenue remained flat.
What is the most critical risk this signals?
- A reduction in the company's overall operating leverage, making the business model more defensive.
- An improvement in the firm's bargaining power over customers, enabling much longer contract payment terms.
- A deliberate strategic push to gain market share by offering customers more flexible, extended payment terms.
- Potential revenue recognition issues or a deterioration in the credit quality of the customer base.
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More Corporate Credit Analysis fsa practice
- What is the company's Funds From Operations (FFO)?
- If revenue is $500M, variable costs are 60% of revenue, and fixed costs are $100M, what is
- What is the company's Days Sales Outstanding (DSO)?
- What is the company's Free Operating Cash Flow (FOCF)?
- What is the company's Current Ratio?
- What is the most likely credit implication?
- What is its Free Operating Cash Flow (FOCF) conversion rate from EBITDA?
- Which firm exhibits higher quality of earnings?