Naslov
Influence of EBITDA on credit worthiness estimation

Autori
Jakaša, Petra

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Book of proceedings of 26th International Scientific Conference on Economic and Social Development-"Building Resilient Society" / - , 2017, 458-465

Skup
26th International Scientific Conference on Economic and Social Development-"Building Resilient Society"

Mjesto i datum
Zagreb, Hrvatska, 08.12.2017. - 09.12.2017

Vrsta sudjelovanja
Ostalo

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
credit rating model, credit risk, credit worthiness, EBITDA, sustainable cash flow

Sažetak
The aim of this paper is to investigate the influence of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) on estimation of credit worthiness. Starting point of estimating credit worthiness is analysis of historic information through analysis of financial statements and ratio analysis, but most important process is estimating available and sustainable cash flow considering that loans can be repaid solely from cash. Given that DSCR (Debt Service Coverage Ratio) uses EBITDA as proxy for available cash flow author focused on influence of EBITDA as predictor variable. Theory and practice uses different models, different ratios and their combination for the purpose of estimating credit worthiness of the company. The paper gives overview of several existing credit rating models pointing out influence of used variables on the final model outcome. In this paper the author wanted to test her assumption that one variable EBITDA margin, measured as EBITDA/revenues, has significantly higher impact on estimation result than all other considered variables. Such presumption is generated from practical experience of the author, while in this paper assumption is tested with statistical methods. The paper includes credit worthiness prediction model developed by the author. For the purpose of this paper credit worthiness is measured as 30 days delay in loan repayment, meaning that companies which are in delay with their loan obligations longer than 30 days have deteriorated credit worthiness and increased credit risk. Model is developed using data provided by one commercial Croatian bank on the sample which includes 354 companies in Croatia. Developed model has 81, 4% accuracy of prediction and the most influential variable proved to be EBITDA margin.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA