companydata.dkCredit assessment (kreditvurdering)
A credit assessment (kreditvurdering) is a systematic evaluation of whether a company can and will pay its obligations. It typically builds on financials and key figures, the company's age and industry, and the history of management and owners.
Credit assessment is used whenever someone considers extending credit: the supplier invoicing at 30 days, the landlord evaluating a commercial tenant, or the bank processing a loan application. The purpose is to price the risk before taking it on.
What goes into a credit assessment?
- Financials: equity, solvency ratio, liquidity, and earnings trend over several years
- Company age and industry — new companies and certain industries carry markedly higher bankruptcy risk
- Management and owner history: past bankruptcies and forced dissolutions among the people involved
- Status changes and warning signs: restructuring, missing financial statements, frequent management changes
A credit assessment is a probability estimate, not a guarantee — solid companies can fail and weak ones survive. The craft is using the assessment to match credit terms: prepayment, shorter terms, or a lower limit where the risk is high.
Related terms
Credit reporting agency (kreditoplysningsbureau)
A kreditoplysningsbureau (credit reporting agency) is a business that commercially processes and discloses information for assessing financial standing and creditworthiness. Operating one requires a licence from the Danish Data Protection Agency and is regulated by the Danish Data Protection Act.
Solvency ratio (soliditetsgrad)
The solvency ratio (soliditetsgrad) shows how large a share of a company's assets is financed with equity. It is calculated as equity divided by the balance sheet total, multiplied by 100.
Bankruptcy (konkurs)
Konkurs (bankruptcy) is the judicial winding-up of an insolvent company: the bankruptcy court issues a decree, a trustee takes over the estate, assets are sold, and proceeds are distributed to creditors by statutory priority.
Equity (egenkapital)
Equity (egenkapital) is the difference between a company's assets and its liabilities — the owners' share of the company. It typically consists of share capital, retained earnings, and any reserves.
Due diligence
Due diligence is the systematic investigation of a company ahead of a decision carrying significant risk — an acquisition, an investment, a credit engagement, or a strategic partnership.