CREDIT RISK ASSESSMENT BASED ON FINANCIAL STATEMENTS
Keywords:
Credit risk, financial statement, liquidity ratio, leverage ratio, profitability ratio, efficiency ratio, financial ratios.Abstract
Credit risk assessment plays a vital role in financial decision-making, especially for banks and lending institutions that rely on accurate evaluations of a borrower's ability to repay debt. Financial statements provide a key foundation for this analysis, offering insight into a company’s liquidity, profitability, leverage, and overall financial stability. This thesis examines how credit risk can be assessed through the interpretation of financial statements, emphasizing the importance of financial ratios such as the current ratio, debt-to-equity ratio, and interest coverage ratio. By exploring both theoretical concepts and practical application, this study highlights how a structured review of financial data can support more informed and reliable lending decisions.
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References
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