Before beginning a study of financial risk assessment, it is important to establish both a framework and a reason for engaging that effort. As it turns out, the analysis of a firm’s financial risk usually lies at the heart of the assessment of overall credit risk as it applies to that enterprise. And if we can employ a general framework for that evaluation of financial risk, one that we can use over and over again, the consistency of our analytical effort will rise and the quality will improve as well.
This lesson provides an overview of, or framework for, the credit/risk analysis process. The overall objective is to determine the likelihood that any extension of credit will be repaid completely and timely. The basic assessments within this overall process are reviewed and the role that financial risk assessment plays in particular is explained. Since the objective of financial analysis includes understanding the underlying causes of business performance, this lesson and Lesson 2 lay a foundation for the remaining modules in the financial risk assessment course.
To see a brief description of all of the lessons included in the Financial Risk Assessment course in the Commercial Lending curriculum, please click here.
Each lesson in this course includes five pages named below. The pages are accessed by clicking on each tab at the top of the presentation area. Pages contain text and graphics that teach essential concepts. Note that there are no Next or Back buttons on the pages. You are free to move to the pages in any order, and as many times, as you like. The tabs will appear as shown below, where you can click on a tab to see an explanation of its contents. Click on the other links for explanations of those areas of the page.
At the bottom of each learning page are LibraryLinx.
A course Library can be accessed by clicking the Library icon in the upper portion of this page. In the upper right hand portion of this screen are several indicators of your progress in this lesson: Lesson Progress, and Lesson Information. Also at the very top of the page are several useful links: Glossary, Notes, Contact Us, and Logout.
To begin working in the lesson, simply click here or on the Lesson icon in the upper portion of this screen. Whenever you want to see this overview material again, just click on the Overview icon.