Science – Future of Lithuania / Mokslas – Lietuvos Ateitis, Vol 9, No 2 (2017)

Companies Credit Risk Assessment Methods for Investment Decision Making

Dovilė Peškauskaitė (Vilnius Gediminas Technical University, Lithuania)
Daiva Jurevičienė (Vilnius Gediminas Technical University, Lithuania)


As the banks have tightened lending requirements, companies look for alternative sources of external funding. One of such is bonds issue. Unfortunately, corporate bonds issue as a source of funding is rare in Lithuania. This occurs because companies face with a lack of information, investors fear to take on credit risk. Credit risk is defined as a borrower’s failure to meet its obligation. Investors, in order to avoid credit risk, have to assess the state of the companies. The goal of the article is to determine the most informative methods of credit risk assessment. The article summarizes corporate lending sources, analyzes corporate default causes and credit risk assessment methods. The study based on the SWOT analysis shows that investors before making an investment decision should evaluate both the business risk,using qualitative method CAMPARI, and the financial risk, using financial ratio analysis.

Article in: Lithuanian

Article published: 2017-06-02

Keyword(s): credit sources; the default causes; bonds; credit risk assessment methods; credit rating agencies; investment decision; SWOT analysis.

DOI: 10.3846/mla.2017.1014

Full Text: PDF pdf

Science – Future of Lithuania / Mokslas – Lietuvos Ateitis ISSN 2029-2341, eISSN 2029-2252
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 License.