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13 Cards in this Set
- Front
- Back
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Five C's of Credit Analysis |
Capacity Collateral Character Conditions Capital |
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Types of Risk |
Domestic International Industry Firm-Specific |
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Short-Term Liquidity Risk |
The near term ability to generate cash to service working capital needs and debt service requirements |
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Long-Term Solvency Risk |
The longer-term ability to generate cash internally or from external sources to satisfy plant capacity and debt repayment needs |
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Credit Risk |
A firm's ability to make payments on interest and pricnciple payments |
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Bankruptcy Risk |
The likelihood that a firm will be liquidated |
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Accuracy Problems |
Based Points in time Analysis Changes outside of the company's control Accuracy of Numbers Appetite of Risk Using Historical Data to predict the future Fraud |
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Rating Agencie |
Standard and Poor's Moody's Fitch Thomson Bank Watch |
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Z-Score meaning |
Z < 1.8 - Firm is likely to go bankrupt 1.8 < Z < 3.0 - Grey Area; firm could be in trouble Z > 3.0 - Firm is not in danger of going bankrupt |
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Bankruptcy and Causes |
FMV Liabilites > FMV Assets Mangement Incompetency Economic Conditions Catastrophe Fraud |
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Chapter 7 - Bankruptcy |
Liquidation; "Going out of business sale" |
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Chater 11 - Bankruptcy |
Reorganization; New management, debt relief, etc... |
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Order in which Creditors are Paid |
Mechanic and Tax Liens Secured Debt Holders Bond Holders Unsecured Debt Preferred Stock Common Stock |
