Learn / Credit analysis in depth Go to Overview 1. Business risk before ratios 2. Ratios beyond leverage and coverage, Pro 3. Sizing a loan from three tests, Pro 4. Stress tests: rates, earnings, and both at once, Pro 5. Lending to recurring revenue companies, Pro 6. Asset based lending and the borrowing base, Pro 7. Pricing and risk adjusted return, Pro Flashcards, 0 of 14 reviewed Basic quiz Advanced quiz Terms Credit analysis in depth
0 of 7 lessons
0 of 14 cards The work between the first ratio and the yes or no: what kind of business it is, how much it can borrow, how it holds up under stress, and whether the price pays for the risk.
A Advanced4 lessons 4 Stress tests: rates, earnings, and both at once Floating rate loans move two levers at once in a bad year: earnings fall and, often, interest rises. A good stress test runs them together and checks what a hedge buys. 10 min 5 Lending to recurring revenue companies Some software companies borrow before they make money. The loan is sized on recurring revenue, protected by retention and liquidity, and expected to convert to an EBITDA test later. 10 min 6 Asset based lending and the borrowing base An asset based loan is sized on what the lender could collect from receivables and inventory, recalculated every month. The cash flow matters less; the collateral matters more. 11 min 7 Pricing and risk adjusted return A loan's price is a spread, a discount, and fees. Its real return is that price less expected losses, and for most funds, magnified by borrowing against the loan. 11 min Q Advanced quiz 10 questions, 80% passes