What are the five C's analysis?
Approved answer
The Five C's Explained
The Five C's is a framework used for evaluating various aspects of a business or investment situation. It consists of:
- Character: This refers to the borrower's creditworthiness and reliability.
- Capacity: This assesses the ability of the borrower to repay loans based on their income and current debts.
- Capital: This looks at the financial resources and investments that the borrower has.
- Collateral: This involves the assets that can be offered to secure a loan, reducing the lender's risk.
- Conditions: This relates to the terms of the loan and the overall economic environment affecting the business.
Understanding these elements can aid in making informed decisions regarding lending and investment opportunities.