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Credit analysts use financial ratio analysis to evaluate the creditworthiness of companies and assess the risk associated with lending them money. Credit analysts need to be able to accurately understand a company’s ability to pay back a loan or other type of debt by assessing the company’s current financial position, historical performance, and future prospects. They look at various liquidity ratios such as cash flow coverage, quick ratio, and current ratio; solvency ratios such as leverage ratios (debt-to-equity), interest coverage; profitability ratios such as return on equity (ROE) and return on assets (ROA); activity ratios such as inventory turnover and accounts receivable turnover; market value/performance indicators like price-earnings ratio (P/E) or dividend yield; capital structure related measures like debt-equity mix or total liabilities-to-total assets.

Investors who are looking for stocks that will appreciate in value in order to generate long term profits tend to focus more on evaluating a company’s investment potential than its ability to repay loans or meet short term obligations. An investor may analyze similar financial data used by credit analysts but from different perspectives – they are more likely interested in profitability rather than liquidity metrics like sales growth rate, earnings per share trend over time, percentage returns compared with industry benchmarking rates etc., these metrics are not directly related with how well an organization is meeting its payment commitments yet these would still provide insight into how successful it is performing financially overall. Analysts also compare debt burden against revenue generation capacity which helps determine if a business has excess borrowing capacity available should they wish to take advantage of any opportunities that arise while still being able to honor its existing payment obligations without suffering significant losses due to inability of generating enough cash flows on regular basis. Such analysis can help investors decide whether investing their funds into particular business makes sense or not depending upon expected returns vis-à-vis associated risks involved in making investments into same businesses within specific sectors/industries.

In conclusion, although both investors and credit analysts utilize some of the same data points when conducting financial statement analysis, they have very different goals: one focuses primarily on assessing credit worthiness while the other uses the information provided by these analyses for making sound investment decisions with potentially higher rewards but greater risks involve too!

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