Four C’s of Credit Analysis

Summaries

The Four C’s

1)      Character – about the management’s characters e.g. financial philosophy, integrity, corporate governance etc.

2)      Covenants- affirmative vs negative

3)      Collateral

4)      Capacity (to pay) – financial ratios, cash flows, backup etc.

Questions

1. List corporate governance best practices

CEO should not be the chairman of the board

CEO should not be able to influence the board by appointing board members

Large board and independent board members