5 terms

CFA2 Fixed income


Terms in this set (...)

four C's of credit analysis
character, covenants, collateral, capacity
profitability ratios
assess the issuer's ability to generate earnings sufficient to pay interest and repay principal. ROE = NI/equity=NI/sales X sales/TA X TA/equity
short term solvency ratios
determine the availability of liquid assets to meet short-term obligations
coverage ratios
examine the adequacy of cash flows generated through earnings to meet debt and lease obligations
capitalisation/financial leverage ratio
with ref to industry, determine the firm's ability to take on aditional risk associated with increased borrowing. total debt to cap ratio = (current liabilities+long term debt)/(current liabilities+long-term debt+minority interest+shareholders equity)