Analysis of the creditworthiness of the enterprise: just about the complex

Every enterprise faces, sooner or later, the need to take some money on credit for the purpose of providing current activities, for the purchase of expensive equipment or for another purpose. Obviously, not every company should be given a loan - the companies differ among themselves in some indicators that characterize the reliability of the firm and the magnitude of the risk when granting a loan. In this article, we will talk about what is an analysis of the creditworthiness of an enterprise, and how it is conducted.

Providing a loan is always associated with a certain risk, because there is always the possibility of non-return of money by the debtor. In order to minimize this risk, large financial institutions, before giving loans to a particular firm, conduct a so-called credit analysis of the enterprise in order to assess the appropriateness of lending money to a given firm. Based on the results of the analysis, a decision is made to grant or not grant a loan, it is also possible to change the terms of the loan - changing the amount, interest rate, maturity of the loan.

The analysis of creditworthiness can be carried out not only from the outside, but also from within. Analyze creditworthiness can and should be done, since it allows you to predict the banks' decision in advance, and thus, to foresee in advance whether it is worthwhile to recruit resources from outside. This procedure is also often carried out by audit companies, as they write in their conclusions about the state of affairs of the firm.

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, and the opinion is formed about the firm's ability to obtain a loan:

1) The ratio "Sales volume / current assets" - this ratio shows the degree of turnover, and therefore, the efficiency of using the company's current assets . The higher this indicator - the more effectively the activity of the enterprise is built, and, therefore, the more reliable it is as a debtor.

2) Value "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 a hurry", sometimes limited to only the two above-mentioned figures. However, this approach is the right way to failure, since the full analysis includes the consideration of three more indicators:

3) The ratio of "short-term debt / equity" - characterizes the degree of coverage of the enterprise's debts with its capital. The smaller this ratio, the easier it will be for a firm to pay its creditors.

4) The ratio "receivables / revenue" - allows you to assess the rate of payment of debts by debtors of the firm. It is logical that a potential lender is interested in making this indicator as small as possible, because the faster the debt to the firm turns into money, the more reliable it is as a debtor.

5) Ratio "liquid assets / short-term debt" - characterizes the degree of coverage of the company's most urgent debts by its most liquid assets. The higher this indicator - the better the firm feels in terms of creditworthiness.

Only after the figures have been calculated (preferably over the last few years), the creditworthiness analysis of the enterprise can be considered complete. Now you can not be afraid to make a decision on granting a loan to an enterprise, because the lender knows all of its financial details.