Quick Finance Tip - Credit Risk

Credit risk is the risk of loss, caused by a failure of a promised payment.

Credit analysis is the evaluation of credit risk. Studies have shown that ratios have been effective in evaluating credit risk, bond yields, and bond ratings.

The credit evaluation rating process includes:

• Meeting with management;
• Tours of major facilities;
• Business risk;
• Financial risk;
• Evaluation of management;
• Monitoring of publicly distributed ratings