Theoretical and Methodological Aspects of Analysis of the Company’s Creditworthiness

Abstract

The aim of the article is studying the theoretical foundations and developing practical recommendations on perfecting the methods of analysis of the company’s creditworthiness. It is proved that crediting creates conditions for improving the financial support of business structures and simultaneously requires an increased attention to effectiveness of the crediting activities of banks and possibility of reducing risks associated with the failure of borrowers to meet their debt obligations under the credit agreement. The state and trends of the changes in the crediting operations and income of Ukrainian banks are studied. The attention is concentrated on the fact that to determine the direction and content of the process of assessing the borrower’s ability to make timely payments on the granted credit, understanding the nature of the subject of assessment and choosing a scientific and reasonable method of analysis is important. The essence of the definition of “creditworthiness” is clarified and perspective areas of improving the analysis of the borrowers’ creditworthiness are identified to ensure the minimization of losses for banks and guarantee on-time performance of debt obligations under the credit agreement considering the specific terms of the contract, priorities in the bank operation, its specialization, position in the market, competitiveness, state of its relations with clients, the level of economic and political stability in the country. The above mentioned propositions will help to improve the organization of the analytical process of assessing the company’s creditworthiness and strengthen the information support of management decisions in management of credit risks of banks.

Keywords

• credit process
• creditworthiness
• analysis
• methods of creditworthiness assessment