Measures bad debt as a share of the lending book value.
Gross book value — Financial input. Directly drives affordability, yield, or cost; small changes compound over time. Example: 0.1.
Gross book value is required
loan loss provisions — Principal amount borrowed. Larger amount increases periodic payments and total interest; compare to down payment. Example: 0.1.
loan loss provisions is required
realized losses — Financial input. Directly drives affordability, yield, or cost; small changes compound over time. Example: 0.1.
realized losses is required
Measures bad debt as a share of the lending book value.
Formula
badDebtRatio = (grossBookValue + loanLossProvisions + realizedLosses) ÷ 3