1. Explain how you would rank the 5 C’s of credit analysis in order of importance...

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Finance

1. Explain how you would rank the 5 C’s of credit analysis inorder of importance and explain your rankings?
2. What are the most important covenants for creditors toinclude in loan agreements with borrowers and why?
3. There is a fundamental flaw in the credit rating agencyprocess – the issuer of securities pays for the rating? How canthis fundamental flaw be repaired going forward and why is that thebest solution compared to other alternatives?
4. If you were the CEO of a financially-troubled company, whatchanges would you make in the operating and financial strategies toavoid bankruptcy and improve future performance?

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3.6 Ratings (434 Votes)

1 Ranking of 5 Cs of credit analysis Character It summarily means credit history It is most important by far even if a person has capacity or collateral if he doesnt have the intention to repay the loan amount of banks will be in doledrums Capacity History of lender is still fine but banks need to assured if the lender as capacity or cash flow to do so Collateral It is needed to know if the business plan fails as a contingency measure bank has assets which can be sold off and amount be recovered Capital To know how confident loanee is in his own plan How much he is investing in the business and what does he feel See Answer

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1. Explain how you would rank the 5 C’s of credit analysis inorder of importance and explain your rankings?2. What are the most important covenants for creditors toinclude in loan agreements with borrowers and why?3. There is a fundamental flaw in the credit rating agencyprocess – the issuer of securities pays for the rating? How canthis fundamental flaw be repaired going forward and why is that thebest solution compared to other alternatives?4. If you were the CEO of a financially-troubled company, whatchanges would you make in the operating and financial strategies toavoid bankruptcy and improve future performance?