distancetodefault
Distancetodefault is a metric used in finance, particularly in credit risk modeling. It quantifies how far a company's creditworthiness is from a point where it would be considered to be in default. This distance is typically calculated based on a company's market capitalization and its debt level. A larger distancetodefault suggests a lower probability of default, while a smaller value indicates a higher risk.
The calculation of distancetodefault often involves a model that considers the volatility of a company's assets.
This metric is valuable for investors, lenders, and risk managers. It offers a quantitative assessment of credit