Time Changes Everything
Deterministic vs Probabilistic
PIT Analysis
Probability
Impact
Timing
- Historical events – certainty
- Trends – smooth or volatile
- Trends removing one-off
- Projection based on trends – co/peers
- Projection based on trends – industry
- Projection based on management strength
- Projection based on forecasted trends
- Materiality – move the needle
- Materiality is relative: to what?
- Financial and non-financial (e.g. social)
- Immediate/Near Term/Future: ST or LT
- Driven by different stakeholders’ time horizon
- Promoters – Perpetual
- Investors – Investment Horizons
- Private Equity – Fund Life
- Lenders – Tenor
PIT Analysis – How to use 3 Dimension Analysis for NTM (Next 12 Months)
Is the Cup Half Empty or Half Full?
| Optimist | Half Full | Tendency of business and borrower |
| Realist | 50% filled with water | How to correct them with realism? |
| Pessimist | Half Empty | Tendency of credit |
