Credit Analysis for Corporate Issuers

Free CFA Level I lesson in Fixed Income. 11 min read, ~1,606 words.

Four Cs: Capacity (cash flow, weighted most heavily), Collateral (asset value), Covenants (legal protections), Character (management and financial policy). Three ratio families: leverage (Debt/EBITDA, Debt/Capital), coverage (EBITDA/Interest, EBIT/Interest), cash flow (FFO/Debt, FCF/Debt). Quantitative factors evaluate the ratios: leverage lower is stronger, while coverage and cash-flow-to-debt are higher is stronger (they...

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What this lesson covers

Content
Example 1
Example 2
Common Mistakes
Check Your Understanding
Exam Shortcuts

Learning objectives

credit analysis corporate issuers

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