Credit Scorecard

Our Methodology

UNIQUE credit reports that show you how a recommended credit guideline is reached, providing you with several options which allow you to make better informed decisions.

The methodology used has been developed by Steve Savva, a leading expert in credit management, over a period of 30 years and it is constantly reviewed and updated.

As well as gathering the standard reporting agency data CMT Credit Scorecard looks at the latest accounts filed and gives you an in-depth accounts analysis and score against key accounting ratios as they relate to different industries. CMT Credit Scorecard also takes Small, Medium and Large companies into consideration, as you cannot analyse every ratio for a small company that doesn’t file a profit & loss account.

We have taken several factors into consideration including:

  • Measures of Performance
  • Measures of Financial Status
  • Working Capital Use
  • Other Criteria

Here are some examples of ratios and how they might vary from industry to industry:

NET PROFIT MARGIN

PROFIT BEFORE TAX
---------------------------------- x 100
SALES TURNOVER

2% net profit is the ideal minimum, generally speaking, but in some industries 0.7% is currently classed as good and in others 10% net profit might be classed as poor!

LIQUID RATIO

CURRENT ASSETS – STOCK
-----------------------------------------
CURRENT LIABILITIES

 In industries which carry a lot of stock, this is going to be a lot lower than for industries that carry very little stock. For instance it takes 9 months for certain cheeses to mature! In the building and construction industry stock could be delivered on a daily basis, so what is a good liquid ratio will vary widely from industry to industry.

EQUITY GEARING

SHAREHOLDERS FUNDS
---------------------------------------------------- x 100
CAPITAL EMPLOYED plus CURRENT LIABILITIES

The higher this is the better, as this shows how much of the net worth is left for the shareholders if a company sells as a going concern for what it is worth on paper at the date of the balance sheet. CMT Credit Scorecard measures against up to 20 different criteria and we can personalise scorecards to suit your specific needs.