Assessing Borrower Liquidity: The Monsters Hide in the Details
For lenders, the Current Ratio is the staple measure of a borrower’s liquidity position. A good ratio shows that the inflows in the short term will easily take care of expected outflows, such as creditor payments. However, this is only a superficial analysis. The real story lies beneath the surface, where surprises may be lurking.
Liquidity Assessment for Credit Risk
Liquidity assessment using Current Ratio is a powerful tool and a staple for credit risk analysts . But it has its limitations. In this three part series, Amit Balooni shares his perspectives and how to fine tune liquidity assessment for credit risk