IDEAS home Printed from https://ideas.repec.org/h/pal/palchp/978-1-349-17325-9_1.html
   My bibliography  Save this book chapter

Introduction

In: Understanding Corporate Credit

Author

Listed:
  • T. H. Donaldson

    (Morgan Guaranty Trust Company of New York)

Abstract

Banks take two broad approaches to analysing the credit of a company and the risk of losing money by lending to it. These have been named elsewhere as “going concern analysis” and “liquidation analysis” or occasionally “gone concern analysis”. Broadly speaking, the difference between them is that going concern analysis assumes that a company continues to operate and tries to assess how it will service its debt. Liquidation of assets, except in the normal course of business, is thus not considered a primary source of repayment. Liquidation analysis pays more attention to the value of the assets, adjusted to allow for losses due to forced realisation; if they exceed the liabilities with a reasonable margin, this is satisfactory evidence that the loan can be paid. Although both types of analysis can lead to either secured or unsecured lending, the liquidation approach tends to emphasise security more than the going concern approach.

Suggested Citation

  • T. H. Donaldson, 1983. "Introduction," Palgrave Macmillan Books, in: Understanding Corporate Credit, chapter 1, pages 1-6, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-17325-9_1
    DOI: 10.1007/978-1-349-17325-9_1
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palchp:978-1-349-17325-9_1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.