Financials (200)

The Financials score considers Statement Quality, Return on Assets (ROA) & Return on Equity (ROE), Sharpe Ratio, and Maximum Drawdown. X-Margin captures financial statement information on the platform, and can automatically calculate the below factors. X-Margin requests that borrowers upload statements a minimum of every 3 months, and preferably every month.

If Risk Monitoring is active, other financial statement information (e.g. Assets, Portfolio Equity, Liabilities) is considered in the context of the real-time metrics (see the Adjustments section). When Risk monitoring is not enabled, Portfolio Equity and Portfolio Leverage are calculated from Financials, and weighted collectively as 400 points of the Credit Score.

Factor	Description	Calculation	Weight
Statement Quality	The majority of digital asset firms do not have audited financials. Quality considers the time period over which historical financials are provided, and the quality of those financials (i.e. Audited, Attested, or Unaudited).	Borrower’s latest reports fall into one of 3 tiers, each of which corresponds to a points total.	50
ROA & ROE	A history of positive ROA & ROE indicates the ability to create and deploy profitable strategies. The returns are considered in the context of the typical borrowing costs for digital assets.	X-Margin uses a table where ROA and ROE are the two inputs.	50
Sharpe Ratio	Sharpe ratio is a risk-adjusted measure of return. X-Margin captures this via the Financials section.	Borrowers fall in one of 3 tiers, each of which corresponds to a point total.	50
Maximum Drawdown	Maximum Drawdown provides insight on the potential worst-case scenario of returns in the context of a volatile digital asset market.	Borrowers fall in one of 3 tiers, each of which corresponds to a points total.	50