Creditworthiness is an element of the company's solvency. The solvency of an enterprise is a more generalized indicator than the solvency, it shows the payment capabilities of the organization, and the solvency is a periodic characteristic that contains the amount of the loan, including interest.
There are the following types of solvency:
- Current solvency - the situation at the moment, i.e. possession of the necessary amount of cash and cash equivalents for urgent repayment of accounts payable;
- Prospective solvency is a situation for a longer term, i.e. it is the ratio of income and liabilities in a longer period.
For an internal analysis of the company's solvency and control over the turnover of funds, a payment calendar is drawn up. It indicates the current amount of cash and the expected payment, as well as the obligations of the organization in the current period.
There is also an operational payment calendar, it is drawn up for a specific date, the actual funds and obligations for the same date are correlated. Ideally, this proportion should be equal to one or slightly more. This correlation allows you to control receipts and expenses on a daily basis, synchronizes negative and positive cash flows, and also determines the priority of certain payments according to the degree of their influence on the company's result.
Creditworthiness is an indicator that determines whether an enterprise has the prerequisites for obtaining a long-term or short-term loan, and the ability to timely repay this loan with interest at the expense of its own funds.
The creditworthiness indicator is an element of the financial stability of the organization.
Creditworthiness shows:
- how the company paid off previously received loans (within the timeframe specified in the loan agreement, in a certain amount, etc.);
- can it, in a critical situation, raise funds to pay off its accounts payable;
The main purpose of this indicator is to determine the current financial condition of the enterprise and possible changes in it in the future.
Creditworthiness analysis is the process of determining the borrower's ability and readiness to repay the requested loan in accordance with the terms and conditions specified in the loan agreement. The bank, to which the client wishing to take out a loan has entered, must determine the degree of his risk and the amount he can provide at the moment.
Criteria by which employees
