Because every credit transaction implies the customer's commitment to the company's payment, if the customer does not have the sincerity to pay, the risk of accounts receivable will inevitably increase. Quality directly determines the recovery speed and amount of accounts receivable, so it is generally believed that conduct is the most important factor in credit evaluation.
2. Ability: refers to the customer's solvency, that is, the quantity and quality of its current assets and its ratio to current liabilities. Judgment is usually based on the customer's debt repayment record, business mode and the actual investigation of the customer's factory and company's business mode.
3. Capital: refers to the financial strength and status of customers, indicating the background of customers' possible repayment of debts, such as debt ratio, current ratio, quick ratio, tangible net asset value and other financial indicators.
4. Collateral: refers to the assets that can be used as collateral when customers or customers refuse to pay or are unable to pay. Once they fail to receive the money from these customers, they will get collateral compensation, which is especially important for customers or customers whose credit status is disputed for the first time.
5. Conditions: refers to the economic environment that may affect customers or customers' payment ability, such as customers' payment history in difficult times and customers' payment possibility in economic downturn.
Extended data
5C factor analysis is an analysis method. Including the borrower's moral character, business ability, capital, asset mortgage, economic environment, etc.
This method mainly analyzes the following five credit elements:
1, the character of the borrower. The borrower is required to be honest, credible and good at management. Usually, it should be analyzed according to the past records combined with the current situation investigation, including the age, culture, technical structure, law-abiding situation, pioneering leadership ability, whether they have won honorary awards or disciplinary actions, the spirit of unity and cooperation, organizational and management ability, etc.
2. Capacity. It is necessary to analyze the production and operation ability and profitability of the borrowing enterprise, whether the management system is sound, whether the management means are advanced, whether the production and sales of products are normal, whether they have market competitiveness, whether the business scale and strength are increasing year by year, and whether the financial situation is stable.
3. Capital. Enterprise capital is often a decisive factor to measure an enterprise's financial strength and loan amount. Strong enterprise capital shows that enterprises have a strong material foundation and anti-risk ability. Therefore, credit analysis must investigate and understand the scale of enterprise capital and the proportion of liabilities, reflecting the degree of protection of enterprise assets or capital to liabilities.
4. collateral. Assets can be used as loan guarantees and mortgages, and sometimes loans can be guaranteed by other enterprises. With mortgage guarantee, credit assets are guaranteed. Credit analysis must analyze whether the mortgage procedures are complete. Whether there is any problem in the valuation and sale of collateral, and whether the guarantor's reputation is reliable.
5. Economic environment (conditions). The economic environment has a certain influence on the future development of enterprises, and it is also an important external factor that affects the credit of enterprises. Credit analysis must analyze the economic environment of the enterprise, including the development prospect of the enterprise, the development trend of the industry and the change of market demand, and predict its influence on the operating efficiency of the enterprise.
Baidu Encyclopedia-Credit 5C Analysis Method
Baidu Encyclopedia-5C Factor Analysis Method