Credit models tend to view physical assets as a source of collateral for lenders. These models tend to punish firms with limited fixed costs and more variable costs as a result.
What these models overlook is that firms with a high share of variable costs can be more resilient and agile in the event of a downturn. Their high share of variable costs enables them to reduce costs quickly.
Over 50% of all firms think variable costs will increase as a share of total costs over the next three years.
What happens to the share of variable costs of intangible-heavy firms?