Bank Capacity to repay

cash flow: critical to debt repayment capacity liquidity: immediate access to cash or cash equivalents to fulfill current obligations. capital: reprsent owners' residual claims on a corporation's assets. collateral: assets pledged to the lender in case of default Traditional credit analysis: analyze collateral assets first Current approach: start with cash flow analysis and an evaluation of financial condition of the borrower. Elements of bank credit analysis Earnings capacity: ability to generate revenue and overcome difficulties Liquidity: bank's access to cash or cash equivalent Capital adequacy: caushion against its liabilities to depositors and creditors Asset quality: the likilihood that loans will be repaid. FI analyst: credit analyst + recommendations