Credit ratings methodology

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Credit ratings methodology

  1. 1. Credit Ratings Methodology
  2. 2. Credit Ratings Methodology Business Risk Profile Analysis Financial Risk Profile Analysis
  3. 3. • • • • Validation of “Company Position” Trends Quality of Earnings & Analytical adjustments Peer Group Comparisons Profitability / Peer Group Comparisons • • • • • • Competitive Factors Market position Keys to Success Size Diversification Management Country Risk • • • • Political Economic Industry – Specific factors Foreign exchange Industry Factors Business Risk Company Position • • • • • • • • • Industry Trends Industry Structure Market Size Growth Potential Cyclicality Bases of Competition Changing Technology Operating Risk Regulatory Environment
  4. 4. • • • • Operating sources & uses Of liquidity Other potential calls on Liquidity Debt Characteristics Bank credit facilities Liquidity / Short-term Factors • • • • Focus on debt service capability Analytical distinctions with profitability Cash flow measures / ratios Accounting • • • Governance Risk Financial Risk Cash Flow Adequacy Accounting Regime Reporting & Disclosure Analytical adjustments • • • • • • • Ownership Board of directors Management practices Financial Strategy Risk Tolerance Accounting Practices Internal controls
  5. 5. CRISIL(CREDIT RATING AND INFORMATION SERVICES OF INDIA LTD.) A global analytical company  Incorporated in year 1987  Provides ratings research and policy advisory services  So far crisil has 30000 debt instruments covering the entire debt market 

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