NAICS Code
What does it mean
The NAICS (North American Industry Classification System) Code categorizes businesses by industry, a crucial aspect found on tax returns. These codes play a pivotal role in aggregating financial data, forming industry averages that aid in benchmarking and analyzing the financial performance of businesses within specific sectors.
Why does it matter
The NAICS Code not only signals the borrower's industry but also offers other valuable insights. Comparing the borrower's financial ratios to the industry average ratios provide a nuanced understanding of a borrower's financial health. These industry average ratios provide a benchmark that a bankers can then use to contextualize their performance. Recognizing the considerable variations in financial norms across sectors, industry average ratios empower bankers to effectively assess the strength of a borrower's financials.
Other Relevant Terms
Want to Master Banking's Favorite Ratio?
The Debt Service Coverage Ratio (DSCR) is one of banking's favorite ratios. Want to ace it without breaking a sweat? No problem! We've got some simple, no-fuss pointers that will help you nail this ratio every time. You've got this!
Get the Cheatsheet NowNot Finding What You Are Looking For?
Let me know what terms, ratios or content you want to see covered.
Request Term or Ratio
Am I missing a key term or ratio? Let me know what you want to see covered.
Request Content
Do you have a topic idea you'd like to see covered? Send it my way.
Checkout Courses
Enhance your skills through a deeper understanding of your customers' businesses.
A bit about me
Greetings! I'm Clay Sharkey, and there is nothing I like more than assisting others in achieving their goals. I firmly believe that by enhancing a banker's understanding of their customer's' business, they can provide superior service. This superior service, in turn, leads to stronger relationships for the bank, improved performance for the businesses, and better experiences for our communities. Win-win-win.
