Credit assessment

The severity of losses experienced on enforcement of a loan will depend on the proceeds of the property sale, foreclosure costs, carry costs, the LTV of the loan, and the priority of the charge on the property. In some cases it is possible to recover a proportion of any remaining debt from the borrower after the security has been realised, which wonld serve to rednce the loss severity. But this cannot be relied on, and so is normally ignored in any credit assessment. 

Since the credit quality of a corporation may vary over time, permanent credit assessments are indispensable so that the bond can be sold in time before a rating downgrade or, respectively, to achieve the appropriate risk premium at any time. In credit assessments, investors fall back on data published in annual or quarterly reports, but also estimate future values based on extensive scenario analysis. These are factors such as debt ratio, liquidity, and profitability of the corporation that are of importance for credit assessment. 

Apart from achieving the highest possible hit ratio (lowest misclassi-fication), another objective is to include as few financial ratios as possible in order to make the function transparent and practicable. Since the literature has not yet decided which financial ratios are most appropriate for credit assessment, various combinations of financial ratios are tried and tested for their discriminatory power. 

Afterwards, calculations of a variety of parameter combinations are run. The objective is to find a discriminant function with the correct signs for the different coefficients. Only this permits the formation of a function where there is no exception to the rule The higher the score, the higher the credit quality of the corporation. Incorrect signs may result in misclassifications and thus wrong credit assessments. 

Exhibit 29.2 depicts the similarity of credit assessments of the industrial model and rating agencies. Here, a value of 24 on the abscissa corresponds with an AAA rating. The lower the value on the abscissa, the poorer the credit rating. The lowest value of 1 symbolizes a rating of D. 

The parameter retained earnings to total assets (RE/TA) includes the cumulative retained earnings of a corporation related to total assets. Retained earnings show both the profitability of the past and the historical dividend policy. Fligh retained earnings increase the net worth of the corporation and thus the access of creditors to assets in the case of bankruptcy. It furthermore shows that a pure focus on shareholder value with high dividends is detrimental to the credit assessment of the corporation. For Swissair,... 

In market value transactions, the portfolio manager s ability is key, since the performance of the underlying portfolio is critical to the structure s success. The originator s procedure for reviewing credit approvals of the borrowers of the underlying loans and monitoring the loans is another factor to consider. The better the credit-assessment and monitoring proce-... 

The prospectus or offer document for an issue provides investors with some information about the issuer so that some credit analysis can be performed on the issuer before the bonds are placed. The information in the oflFer documents enables investors themselves to perform their own credit analysis by studying this information before deciding whether or not to invest. Credit assessments take up time, however, and also require the specialist skills of credit analysts. Large institutional investors do, in... 

Alcohol Production. Studies to assess the costs of alcohol fuels and to compare the costs to those of conventional fuels contain significant uncertainties. In general, the low cost estimates iadicate that methanol produced on a large scale from low cost natural gas could compete with gasoline when oil prices are around 140/L ( 27/bbl). This comparison does not give methanol any credits for environmental or energy diversification benefits. Ethanol does not become competitive until petroleum prices are much higher. 

Typical events that are considered are fire, explosion, ship collision, and the failure of pressurized storage vessels for which historical data established the failure frequencies. Assessment of consequences was based partly on conservative treatment of past experience. For example ilic assessment of the number of casualties from the release of a toxic material was based on past histoiy conditioned by knowledge of the toxicology and the prevailing weather conditions. An altemati. e used fault trees to estimate probabilities and identify the consequences. Credit is taken in this process for preventative measures in design, operation, and maintenance procedures. Historical data provide reliability expected from plant components and humans. 

Before they will be given credit for using the language in formal assessments, students must... 

The University of Georgia College of Pharmacy designates this on-line educational series for a maximum of 170 contact hours (17.0 CEUs). A Request for CE must be made for EACH offering and continuing education credit will be awarded and statements issued on-line for successful completion of materials and assessment. 

Self-assessment questions and answers for each chapter. Located in the Online Learning Center, these questions are designed to evaluate student learning and may be used to obtain approximately 170 hours of continuing education credit for licensed pharmacists, nurse practitioners, physicians, and physician assistants. 

To assess the potential hazard of a new plant, the index can be calculated after the Piping and Instrumentation and equipment layout diagrams have been prepared. In earlier versions of the guide the index was then used to determine what preventative and protection measures were needed, see Dow (1973). In the current version the preventative and protection measures, that have been incorporated in the plant design to reduce the hazard-are taken into account when assessing the potential loss in the form of loss control credit factors. 

In assessing the true cost benefits associated with a steam saving, the steam and power balance for the site utility system must be considered, together with the costs of fuel and power (or power credit in an export situation). In general, a surplus of steam resulting from a steam saving in a process demand can be exploited by... 

In some cases, after completing the consequence portion of the analysis, the impact of the consequences is deemed so severe that the company may decide to provide fire protection that will provide mitigation without completing the likelihood analysis. It is important to take the time to analyze the consequences (conduct an FHA) and determine if reasonable mitigation measures can be applied before continuing with the fire risk assessment. Credit for additional mitigation measures can be taken in the fire risk assessment. 

CONCEIVED and PRESENTED customized analytics designed to assess Asset Liability Management risk profiles, which led to increased sales of securities to banks, credit unions, and municipalities. 

Such an action is mitigated by two considerations. First, it is expected that even with closed disposal facilities, annual visual inspections, if not caretaker activities, will occur. Furthermore, the recommended disposal cell design (including rip-rap and clay cover) will discourage the assumed activity. However, no credit was given for these controls in this assessment. 

Some other analysts express the opposite concern, that prices might rise to levels deemed to pose an unacceptable risk to European industry, and that to prevent this risk the system should contain a price cap or safety valve (e.g. Bouttes et al., 2006). Our assessment of phase II, in terms of both supply-demand balance and the economics of competitiveness over the 5-year period, leads us to be sceptical that this is a realistic concern. It is, however, true that a planned response to any such eventuality would be better than a panic-based reaction such as occurred in the California NOx trading system. Should prices rise to levels that were judged to pose a credible threat to competitiveness of a particular sector, and State-aid rules prevented auction revenues being used to assist it (or the country concerned had not conducted any auctions), the most obvious first step would be to relax supplementarity constraints, and possibly expand the scope of emission credits that could qualify for compliance purposes. We do not consider issues of price ceilings or safety valves beyond this. 

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