When a Financial Analyst Examines the Credit Risk of a Company,it

question 63

Essay

When a financial analyst examines the credit risk of a company,it is common that he or she uses a set of factors that all begin with the letter "C." Each factor provides a consideration that enters into the lending decision.List and discuss how each of the factors affects a company's credit risk.

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Definitions:

Statistical Process Control

A method of quality control which employs statistical methods to monitor and control a process to ensure that it operates at its full potential.

Special Causes

Special causes, in the context of quality control, refer to unusual, unpredictable factors that cause variations in a process, distinguishing them from common causes.

Common Causes

Factors that consistently contribute to a process's variability; inherent within the process and usually indicative of systemic issues.

Variation

The extent to which data points in a dataset differ from each other and from their average value.