Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
Evaluation of creditability and risk minimisation: The effect of accounting for intangibles
Stockholm University, Faculty of Social Sciences, School of Business.
2005 (Swedish)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [sv]

The recent history knows numerous examples of creditor’s inability to evaluate financial solvency of the client correctly. Creditors’ risks do not only concern individual relations between the two parties but the economy in general. The standard loan-giving procedure considers evaluation based on a number of financial ratios. Using the standard method a company that in reality is creditable may sometimes be counted as insolvent by the bank – due to the structure of the balance sheet, for instance. On the other hand, good financial ratios would not always provide assurance about the company’s capability to pay back the loan. Each of the situations would create risk for the creditor. The structure of the balance sheet brings with it a number of financial ratios, one of which is liquidity of the balance sheet. Some assets, such as intangible assets for example, may often be seen as illiquid. Therefore, an evaluation method based on the balance sheet (which often excludes intangibles from the calculations) is not always efficient. This is also because nowadays the number of “intangible” companies is increasing, the economy in general is becoming more research-oriented and therefore alternative evaluation techniques should be applied. Banks, in other words should adapt themselves to the new environment. Among such techniques can be named e.g. taking a closer look at the company, it’s activity, the assets and bookkeeping procedures which may provide additional information to the creditor and even influence the decision making process. Such procedures may provide more credible and reliable information, uncover hidden risks, and help to predict potential bankruptcy or, on the other hand, destroy suspicions about the client’s insolvency. The results of the research provide information on whether the banks are facing evaluation problems, the creditor’s attitude to accounting for intangibles and sufficiency of information on intangibles. In this respect the question whether banks are prepared to perform the client’s field research or internal auditing procedures is answered. The empirical research is based on four interviews with credit managers in Sweden, Finland and Russia. The general outcome of the study shows that alternative measures are applied when this is considered necessary. In Finland and Sweden auditing is often relied upon for evaluating the clients’ activity and credibility of its’ financial statements. On the other hand, field-research is a more common practice among Russian creditors.

Place, publisher, year, edition, pages
2005.
National Category
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-5978OAI: oai:DiVA.org:su-5978DiVA: diva2:195889
Uppsok
samhälle/juridik
Available from: 2007-01-05 Created: 2007-01-05Bibliographically approved

Open Access in DiVA

fulltext(278 kB)429 downloads
File information
File name FULLTEXT01.pdfFile size 278 kBChecksum MD5
22bd6e812ac83cdfbe1590165df367b27fcc70ffe996e04dc12622f7668b29ce99c47237
Type fulltextMimetype application/pdf

By organisation
School of Business
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 429 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

urn-nbn

Altmetric score

urn-nbn
Total: 283 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf