Risk Rating of the 5 Cs
The risk rating for the 5 Cs of credit assigns a numerical rating of 1 through 10 (1 being the best and 10 being the worst) to each one of the 5 Cs
- Cash flow
These ratings are then blended into and "Overall" rating base on a portfolio management formula.
Cash flow is rated using a "Debt Service Coverage Ratio" for measuring both historical and forecasted cash flows. A grade rating (A though F) is given to each calculation to measure the quality of the cash flow stream.