Credit Evaluation Process
This is the most important process in determining the credit worthiness of the borrower. As an account officer, you need to plot the submitted audited financial statements of the client in a spreadsheet and do several financial evaluation i.e. horizontal and vertical analysis and financial ratio analysis -- liquidity, activity, solvency and profitability; and if necessary, financial projections should be done further.
This step will determine how much the requirement of client is and if he / she can repay the loan on the specified period. This is also a chance if additional facility can be extended other than what is requested.
This is the most important process in determining the credit worthiness of the borrower. As an account officer, you need to plot the submitted audited financial statements of the client in a spreadsheet and do several financial evaluation i.e. horizontal and vertical analysis and financial ratio analysis -- liquidity, activity, solvency and profitability; and if necessary, financial projections should be done further.
This step will determine how much the requirement of client is and if he / she can repay the loan on the specified period. This is also a chance if additional facility can be extended other than what is requested.
However, the evaluation job of the account officer does not end in just plotting the figures in the spreadsheet. He / she must validate the numbers written in the audited financial statements. This is done by comparing the bank statements, customers and suppliers volume, industry analysis, and also through interview with client. In this way, the correctness of the figures will be determined. Adjustments in the financial analysis and presentation could be made if the figures found are overstated or understated and detailed explanation should be made on the significant movements in the accounting items.
It is important to learn financial accounting to be equipped with good financial analysis skills and techniques in your account management job.
It is important to learn financial accounting to be equipped with good financial analysis skills and techniques in your account management job.
Attached is a spreadsheet template in Excel version.
spreadsheet.xlsx | |
File Size: | 33 kb |
File Type: | xlsx |
For financial analysis basic concepts, click the link below:
http://helpsme.com/articles/accounting/basic-accounting-concepts
http://helpsme.com/articles/accounting/basic-accounting-concepts