Each company, sooner or later, faces the need to take a certain amount on credit in order to ensure current activities, to purchase expensive equipment or for another purpose. Obviously, far from every company should give a loan - companies differ among themselves in some indicators characterizing the reliability of the company and the amount of risk when granting a loan. In this article we will talk about what is the analysis of the creditworthiness of the enterprise, and how it is carried out.
The provision of a loan is always associated with a certain risk, since there is always the possibility of non-return of money by the debtor. In order to minimize this risk, large financial institutions, before giving a loan to a particular company, conduct a so-called analysis of the creditworthiness of the company in order to assess the appropriateness of lending money to this company. Based on the results of the analysis, a decision is made to provide or not to provide a loan, it is also possible to change the terms of the loan - changing the amount, interest rate, loan repayment terms.
Credit analysis can be carried out not only from the outside, but also from the inside. It is possible and necessary to analyze creditworthiness, since this allows you to predict the decision of banks in advance, and thus foresee in advance whether it is worth counting on attracting resources from outside. This procedure is also often carried out by audit companies, which is written in their conclusions regarding the state of affairs of the company.
From a practical point of view, the analysis of the creditworthiness of an organization is the calculation of several key indicators, based on the values of which, an opinion is formed about the possibility of a company to get a loan:
1) The ratio "Sales volume / current assets" - this ratio shows the degree of turnover, and therefore, the efficiency of use of current assets of the company. The higher this indicator is, the more efficiently the activity of the enterprise is built, and therefore, the more reliable it is as a debtor.
2) The ratio "Sales volume / equity" - characterizes the efficiency of using the authorized capital of the enterprise. Again, the higher the value of this indicator, the higher the creditworthiness of the enterprise.
If the analysis of the creditworthiness of the enterprise is carried out in haste, sometimes it is limited to only the two above figures. However, this approach is the right path to failure, since a full analysis includes consideration of three more indicators:
3) The ratio of “short-term debt / equity” - characterizes the degree of coverage of the company's debts by its capital. The smaller the ratio, the easier it will be for the company to pay its creditors.
4) The ratio of "receivables / revenue" - allows you to assess the speed of payment of debts by the debtors of the company. It is logical that the potential lender is interested in making this indicator as small as possible, because the faster the debt to the company turns into money, the more reliable it is 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 with its most liquid assets. The higher this indicator, the better the firm feels in terms of creditworthiness.
Only after these indicators are calculated (preferably over the past few years), an analysis of the company's creditworthiness can be considered completed. Now you can not be afraid to make a decision on a loan to the company, because the lender knows all its financial ins and outs.