The Credit Asset of Enterprise Accounts Receivable Pricing Model

Abstract EN

Based on the thinking of holism and reductionism, this paper creatively constructed the credit asset pricing model of enterprises’ accounts receivable, namely, the BEST pricing model, and it was demonstrated effectively.

The model gave an overall evaluation on the default probability of buyer and environment, as well as buyer loss given default resulting from the factors including Seller (S), Buyer (B), and Environment (E).

The model is also utilized with the optimal control management Technology (T) to maximize the intrinsic value of the credit asset.

The paper put forward the Duration of accounts receivable aging, measurement method of dynamic free interest rate, and amended the KMV model to solve the default probability of accounts receivable of listed and nonlisted companies.

To evaluate the credit asset risk, the following were selected: three effective financial indicators, seven nonfinancial index clusters, and sixty-three specific nonfinancial index variables of the buyer; one index and eight specific indicators of the seller; and one index and fourteen specific indicators of nonsystematic risk of the environment.

Five appropriate hedge parameters are used to control the risk.