Analysis of the creditworthiness of the company: simple to the complex

Each company faces sooner or later need to take a certain amount of credit to ensure current activities, to buy expensive equipment or for any other purpose.Obviously, not every company is giving credit - companies differ in some of the indicators characterizing the reliability of the company and the amount of risk in the loan.In this article we will talk about what the analysis of the creditworthiness of the company and how it is spent.

Credit is always associated with some risk because of non-refoulement is always a chance of money the debtor.To minimize this risk, the large financial institutions, before giving a loan to a particular firm, conducted the so-called analysis of the creditworthiness of the company to assess the feasibility of providing money in the debt of the company.Based on the analysis of the decision to grant or not to grant the loan, it is also possible decision to change the terms of lending - change the amount, interest rate, maturity of the loan.

credit analysis can be carr

ied out not only from without but also from within.To analyze the creditworthiness of possible and necessary, since it allows to predict in advance the decision of banks and thus to foresee whether to expect to attract resources from abroad.This procedure is often carried out the audit of the company, what they write in their opinions about the state of affairs of the company.

From a practical point of view, the analysis of the creditworthiness of the organization is the calculation of a few basic parameters based on the values ​​of which, and formed an opinion about the possibility of the company to get a loan:

1) The ratio of "Volume of sales / current assets" - this ratio shows the degree of turnoverand therefore, the efficiency of use of circulating assets of the firm.The higher the figure - the more efficiently constructed of an enterprise, and therefore, the more reliable it is as a debtor.

2) Ratio of "Volume of sales / equity" - characterizes the efficiency of use of the authorized capital of the enterprise.Again, the higher the value of this indicator, the higher the creditworthiness of the company.
If the analysis creditworthiness of the company is carried out "in haste", is sometimes limited to two figures above.However, this approach - a recipe for failure, because a complete analysis includes consideration of three other indicators:

3) The ratio of "short-term debt / equity capital" - characterizes the degree of the company cover the debts of its capital.The lower the ratio, the better the company will pay off its creditors.

4) The ratio of "receivables / revenue" - allows you to estimate the rate of payment of debts of the company debtors.Logically, the potential lender is interested in that this indicator had a value as low as possible, because the faster the debt to the company is converted into money, the more reliable herself as a debtor.

5) The ratio of "liquid assets / short-term debt" - characterizes the degree of coverage of the most urgent debts of the company of its most liquid assets.The higher the figure - the better it feels firm in terms of creditworthiness.

only once calculated (preferably in the last few years), these indicators, the analysis of the creditworthiness of the company is completed.You can now not afraid to make a decision on granting loans to enterprises, because the lender knows the ins and outs of it financially.