How does credit risk affect business?
Credit risk is the risk businesses incur by extending credit to customers.
It can also refer to the company's own credit risk with suppliers.
A business takes a financial risk when it provides financing of purchases to its customers, due to the possibility that a customer may default on payment..
How does credit risk affect the profit of the company?
Essentially, credit risk refers to the risk that a lender may not receive the owed principal and interest, which results in an interruption of cash flows and increased costs for collection..
What are the impact of financial risk on profitability?
risks pose greater threat to bank profitability because they are capable of hindering their lending ability. risk arises as a result of mismatch of maturities of assets and liabilities. the cost of capital, reducing return from earning assets and decreasing the value of equity capital..
What is the profitability risk?
Profit risk is the concentration of the structure of a company's income statement where the income statement lacks income diversification and income variability, so that the income statement's high concentration in a limited number of customer accounts, products, markets, delivery channels, and salespeople puts the .
What is the relationship between credit risk and financial performance?
Credit risk is an internal determinant of bank performance.
The higher the exposure of a bank to credit risk, the higher the tendency of the banks to experience financial crisis..
- Profit risk is the concentration of the structure of a company's income statement where the income statement lacks income diversification and income variability, so that the income statement's high concentration in a limited number of customer accounts, products, markets, delivery channels, and salespeople puts the
- risks pose greater threat to bank profitability because they are capable of hindering their lending ability. risk arises as a result of mismatch of maturities of assets and liabilities. the cost of capital, reducing return from earning assets and decreasing the value of equity capital.
