creditworthiness

(noun)

The property of being creditworthy, when a person is deemed likely to repay debts and / or has an acceptable credit rating

Related Terms

Examples of creditworthiness in the following topics:

  • Surprises and Returns

    • If a news announcement is seen as positive for a company, its fixed-income instruments might seem more creditworthy, its bonds will rise in price, and its yield will decline.
    • Take a look at the creditworthiness ratings of different countries by Standard and Poors.

  • Analyzing Long-Term Liabilities

    • Analyzing long-term liabilities often includes an assessment of how creditworthy a borrower is, i.e. their ability and willingness to pay their debt.
    • As part of their analysis Standard & Poor's will issue a credit rating that is designed to give lenders and investors an idea of the creditworthiness of the borrower.

  • Employment in Finance

    • Credit analysts work in a variety of institutions to assess the creditworthiness of firms, governments, or individuals for loans.

  • Times Interest Earned Ratio

    • The higher this ratio, or the more EBIT a company can produce relative to its required interest payments, the stronger the company's creditworthiness and overall financial health are considered to be.

  • Uses of the Financial Statement

    • Vendors who extend credit may use financial statements to assess the creditworthiness of the business.

  • Purchase Process

    • Fund managers provide dedicated management and save the individual investor from researching issuer creditworthiness, maturity, price, face value, coupon rate, yield, and countless other factors that affect bond investing.

  • Outputs of Accounting

    • Vendors who extend credit to a business require financial statements to assess the creditworthiness of the business.

  • Pros and Cons of a Corporation

    • In many jurisdictions corporations, whose shareholders benefit from limited liability, are required to publish annual financial statements and other data, so that creditors who do business with the corporation are able to assess the creditworthiness of the corporation and cannot enforce claims against shareholders.

  • Limitations of Financial Statements

    • Another limit to financial statements as a window into the creditworthiness or investment attractiveness of an entity is that financial statements focus solely on financial measures of health.

  • Advantages of Corporations

    • Without limited liability, a creditor would probably not allow any share to be sold to a buyer at least as creditworthy as the seller.