Assessment Standard of Enterprises’ International

Credit Rating and Promotion

2．Theoretical Basis of Assessment Model

In commercial credit assessment, the current method in the world is based on the study of “Five Cs” Theory. The so-called “Five Cs” means quality of the assessed objects or paying Character, Capital scale, repaying Capacity, Collateral status, and environment or Condition. Representation of enterprises’ commercial credit will finally be the common effects of the five aspects.

Quality or Paying Character

It means enterprises’ quality and character, which has a direct influence on the aspiration of fulfilling contract or paying. According to the research of D&B, compared with some developed countries, quality has a more significant influence on Chinese enterprises. We generally carry out study and measurement according to enterprises’ historic payment records, quality of management, and degree of management standardization.

Capital Scale

Under other situations of same conditions, enterprises that have larger scale enjoy a stronger capability of preventing risks. While, scale that associates most directly with commercial credit is capital scale. Net assets, working capital, sales revenue, etc, are common measurement index.

Repaying Capability

As per the study of D&B, in the whole world, the main factor that causes a poor credit performance lies in the absence of repaying capability. The cases of big enterprises that went bankruptcy due to the lack of repaying capability can be found everywhere. Risks of repaying capability include short-term risk and long-term risk. Analysis of enterprises’ financial status and management status is the basis of studying the repaying capability.

Mortgage Collateral

It means a stand-by guarantee of repaying debt provided by enterprises. Generally, it is necessary to appraise the mortgaged assets, and analyze warrantor’s credit to decide the value of mortgage collateral. Consideration and discussion of this aspect is a fine guarantee measure for enterprises’ commercial credit. Furthermore, collateral situation provided by enterprises for the third party also needs to be taken into consideration.

Environment or Condition

Matters are the common effects of internal and external causes. In this aspect, we consider the influence of some system risks, such as the influence of some peculiar risks of country, region, and industry on enterprises’ credit.

http://www.ciimc.com

Permanent Legal Advisor:Beijing Huicheng Law Firm　　Director Lawyer:Fan Shiwen       Vice Director Lawyer:Zheng Guochen

Add: 6/F,United International Building,No.19 Dongsanhuannan Rd.Beijing,100021 China

Website Management:Network Department of CIIMC      Email:info@wedd.org  

Tel：+86 10－87665186 　Fax：+86 10－87665880/87665881