Glossary
ASSET – A resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity. The value of a company's assets is equal to the sum of liabilities and equity.
CAE – Classification of Economic Activities that defines the branch of business of a business entity. This classification consists of a 5-digit code, it is unique and officially recognized by government bodies in Portugal and the rest of the world.
FINANCIAL CAPACITY - It is an evaluation measure that represents the existence of financial resources and their respective impact in terms of credit risk management. This indicator is calculated based on equity, whenever we have access to the Financial Statements or, in its absence, in Share Capital.
EQUITY CAPITAL - Financial resource necessary for investment. The capital can be own when it belongs to the investing entity.
STOCKS OR INVENTORIES - Warehousing goods purchased or produced by the company and intended for processing, sale or consumption.
CREDIT LIMIT - this indicator recommends a monthly limit of involvement in terms of granting credit and is attributed according to the results of the assessment of the level of credit risk and the financial capacity of an entity, based on a weighting related to the equity capital of an entity or, in its absence, with the share capital. The recommended credit limit only provides a monthly credit benchmark to be extended to a given entity and should not serve as a maximum credit limit. Rather, it must be adjusted to the reality and specificities of each business, as well as the cultures and credit granting policies of the entities involved.
CREDIT RISK LEVEL - translates the probability of default risk in credit-based commercial transactions. This indicator constitutes a global assessment of the businesses based on the information available on the most significant credit elements, such as history, seniority, financial information, commercial incidents and insolvencies, size, seniority, sector of activity, among others.
LIABILITIES – It is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources from the entity that embody economic benefits. That is, it corresponds to the obligations assumed by a company towards its creditors, in the form of debts to be paid. Liabilities are also called borrowed capital, as they constitute third-party capital that finances the company's activity (a company's assets are financed by equity + borrowed capital).
SCORE DYNAMIIC - is a score system for business entities that measures the probability of default in terms of short-term credit risk. It is a dynamic model fully developed by the IIC, based on the best-known statistical methodologies and on the intrinsic characteristics of the Portuguese business fabric, which analyzes and relates a set of determining factors in assessing behavior in terms of credit risk.
NET INCOME - Denomination used to designate the profits or losses (if it is negative) of a company, in a certain period of time, generally the financial year which, as a rule, coincides with the calendar year. The net result corresponds to the profit obtained by the company already after deducting the taxes levied on it.
NET SALES – corresponds to revenue from sales of the company's products and services, net of sales taxes, rebates and returns.
COMMERCIAL INCIDENT – is public information of a negative nature such as a civil lawsuit, foreclosure, insolvency or special revitalization process. They are generally triggered as a result of non-compliance proceedings and, depending on their nature, can adversely affect a company's commercial reputation.
FINANCIAL STATEMENTS – They are a structured and organized representation of the financial and equity situation of a given company. The main financial statements are as follows: Balance Sheet, Income Statement and Cash Flow Statement.
IES – SIMPLIFIED BUSINESS INFORMATION – is a new form of delivery, electronically and in a totally dematerialized way, of declarative obligations of an accounting, tax and statistical nature.
RATIOS – are relationships between quantities originating from the financial statements that can be expressed as a quotient or percentage. It is one of the most used financial and economic analysis techniques and consists of establishing relationships, or ratios, between accounts and groupings in the Balance Sheet and Income Statement. They make it possible to synthesize a large amount of information and compare the financial and economic performance of companies, as well as their evolution over time.
