Explain how you would rank the 5 C's of credit analysis in order of importance and explain
Question:
Explain how you would rank the 5 C's of credit analysis in order of importance and explain your rankings?
Character - The biggest thing is credibilty and banks knowing that the loan will be repaid.
Capacity - Need to make sure there is enough cash flow to make the loans. Credit scores are also evaluated. "This is because the way a person handles personal credit and their own credit cards often shows how he or she will manage business credit," (Navy Federal, n.d.).
Collateral - A backup plan. The bank has to know what is available for liquidation if needed.
Capital - Seeing how much money is being put into the company and where they think the future of the company is headed.
Conditions - Showing a solid business plan to prove success based on the conditions set by the market and industry
- What are the most important covenants for creditors to include in loan agreements with borrowers and why?
- There is a fundamental flaw in the credit rating agency process - the issuer of securities pays for the rating? How can this fundamental flaw be repaired going forward and why is that the best solution compared to other alternatives?
- If you were the CEO of a financially-troubled company, what changes would you make in the operating and financial strategies to avoid bankruptcy and improve future performance?
- Most Important Things Learned - What are the most important things you learned from the study of this week's readings, discussions, and assignments?
Explain how you would rank the 5 C's of credit analysis in order of importance and explain your rankings?
What are the most important covenants for creditors to include in loan agreements with borrowers and why?
There is a fundamental flaw in the credit rating agency process - the issuer of securities pays for the rating? How can this fundamental flaw be repaired going forward and why is that the best solution compared to other alternatives?
If you were the CEO of a financially-troubled company, what changes would you make in the operating and financial strategies to avoid bankruptcy and improve future performance?
Concepts of Database Management
ISBN: 978-1285427102
8th edition
Authors: Philip J. Pratt, Mary Z. Last