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Credit Evaluation Criteria

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In the Credit Evaluation, the 5 Cs that should be considered are:

  1. Capital: Ability to pay
  2. Character: Willingness to pay
  3. Capacity: Ability to turn business into profit
  4. Condition: Business and trading environment
  5. Collateral: Guarantee available

Evaluation Criteria Measurement
Capital
  • Cash availability
  • Quick Asset ratio
  • Average debtors day
  • Credit facilities
Character
  • Average creditors day
  • Directors of the company
Capacity
  • Net profit before tax ratio
  • No of years trading
Condition
  • Nature of business activities
Collateral
  • Legal constitution
  • Guarantee

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2 Responses to “Credit Evaluation Criteria”  

  1. 1 Optimizing Working Capital By Managing Debtors | Basic College Accounting.com
  2. 2 ALL TOPICS COVERED IN HEADING-CREDIT MANAGEMENT/CREDIT CONTROL | FMAccounting


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