Talk:Credit analysis

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Additions

I think this has the makings of a great article. However, I think we can add a great deal more information. For example: the article says that banks like to see a DSCR of at least 1.20:1. While this is certainly true in my experience and is held as something of an industry standard (we should also probably discuss why that is) I think we need to provide a source (RMA?) as well as supplying a range of other DSCRs for other types of deals. If a bank is funding the construction of a property where the the primary source of repayment will flow from lease income and the borrower has signed long-term triple net leases in effect with a national credit tenant(s)then a coverage of 1.20:1 may very well be unrealistic for several reasons. Both because the borrower may very well sell the cash flows on the permanent or secondary market (though you would obviously still need a coverage of more than 1:1 to compensate the discounting of the future cash flows ) and repay the loan ahead of time with the proceeds from the sale or because most large national credit tenants are going to have an incredibly accurate idea of what the cost of the property would be and probably won't pay what is essentially a 20% bonus for the use; especially if they will be an anchor tenant in a larger property that will draw additional businesses who will pay that premium.

I think we can also expand on the different areas that analysts cover. Concerning examination of collateral I think we should have a section on methods (appraisal reviews, pulling comps, audits of inventory, etc...). We should also have a section on tools used (Excel and the ubiquitous HP-12c for example). We could also have some examples of company numbers, tax returns (fictitous of course) and show the process of how we evaluate certain information. Etc....

I think that once we get a lot of analysts working on this (after all we tend to be a very detailed-oriented bunch by necessity) we could quite easily have the most thorough and informative article on Wikipedia. 216.79.112.203 (talk) as of 04:00, 30 August 2008