Under stress – How to stress test a borrower’s financials
Abstract: Conducting a so-called “stress test” of a prospective borrower’s financial position and its ability to withstand a crisis can provide a window into its inner workings and leadership. This article suggests three steps for stress testing a borrower’s financial health. The article points out that stress tests can help a lender assess a potential borrower’s level of preparedness. Stress testing also can help the borrower identify and reinforce any vulnerable areas.