1. What is the demand for credit? Discuss the three activities and their connections to the demand for credit.
2. Who provides credit? Discuss the differences and similarities of these creditors.
3. What are the credit risks? Discuss the steps in processing credit risk.
4. What are the major credit risk measures? Explain their relationship.
5. Give a couple of numeral examples to show how coverage ratios help to identify the risk or coverage ability on risk. Hint: Times interest earned, EBITDA coverage ratio, cash flow operations to total debt, and free operating cash flow to total debt each have their perspective on the ability of debt paying ability.
6. Why are liquidity and solvency ratios important to credit analysis? Use the numerical examples to show their utility.
7. Why is the credit rating necessary for credit analysis? Use one rating system to show the usefulness.