Chapter 5 PPT - Part 2 - Analyzing Credit Risk Potential...

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Chapter: 05 1 Analyzing Credit Risk Potential lenders to a firm, assess the likelihood that the firm will pay periodic interest and repay the principal amount. Lenders may use following checklist as factors. Circumstances leading to need for loan. Credit History Has a firm borrowed in past and has it successfully repaid it? Poor credit history can doom a firm to failure.
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Chapter: 05 2 Analyzing Credit Risk (contd.) Cash flows Lenders prefer that the firm generates sufficient cash flows to pay interest and repay principal on a loan rather than selling the collateral. Collateral Capacity for debt Contingencies Character of Management Communication Conditions or covenants
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Chapter: 05 3 Analyzing Bankruptcy Risk Models for bankruptcy prediction Univariate bankruptcy prediction models: Error types Examines the relation between a particular financial statement ratio and bankruptcy.
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Chapter: 05 4 Analyzing Bankruptcy Risk (Contd.) Bankruptcy prediction models using multiple
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This note was uploaded on 03/06/2012 for the course ACCT 6344 taught by Professor Anderson during the Fall '11 term at University of Texas at Dallas, Richardson.

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Chapter 5 PPT - Part 2 - Analyzing Credit Risk Potential...

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