ReadyRatios Software Manual


Statistics


Rating of Financial Condition

ReadyRatios has a unique method of ranking the financial position of the analyzed companies. This allows any user to obtain an objective assessment of the financial status, irrespective of the analyst's opinion. At the same time, the user can adjust the ranking procedure, by changing the formulas and qualitative assessments of indicators used to rate performance (see "Settings" - "Formulas customization"). A generalized (integral) estimate of the financial condition of the company consists of assessing the financial position and the financial performance. In this case, the following scale is used:

 Score

Conventional Symbol

(rating)

Qualitative Assessment of Financial Condition

from

to*

2

1.6

AAA

Excellent

1.6

1.2

AA

Very good

1.2

0.8

A

Good

0.8

0.4

BBB

Positive

0.4

0

BB

Normal

0

-0.4

B

Satisfactory

-0.4

-0.8

CCC

Unsatisfactory

-0.8

-1.2

CC

Adverse

-1.2

-1.6

C

Bad

-1.6

2

D

Critical

* Inclusively.

Rating "AAA" - "AA" indicates the excellent (very good) financial position of the company, its ability to meet its obligations in the short term (based on the precautionary principle), and possibly in the long term. Such companies are classified as reliable borrowers with a high degree of credit worthiness.

Rating "A" - "BBB" indicates the company's good (positive) financial position, its ability to meet its obligations in the short term (based on the precautionary principle). Companies with this rating come within the category of borrowers whose likelihood of obtaining credit resources is high (good credit worthiness).

Rating "BB" - "B" represents the normal (satisfactory) financial condition of a company, when most of the indicators fall within the norm. Companies with this rating may be considered as contracting parties; in relations with whom a cautious risk management approach should be taken. Such companies may qualify for credit resources, but the decision rests largely on the analysis of additional factors (neutral creditworthiness).

Rating "CCC" - "CC" indicates the unsatisfactory (poor) financial status of the company when, as a rule, financial indicators do not fall within the norm. The reasons for this could be either objective (mobilization of resources for the realization of large-scale projects, major transactions, an overall downturn or crisis in the economy of the country or industry, etc.), or the result of inefficient management. To obtain credit resources, these companies may have to provide reliable money-back guarantees which depend neither on the financial situation of the company nor the results of the company's future performance (poor creditworthiness).

Rating "C" - "D" indicates the very poor or critical condition of the company, respectively. Most of the financial indicators are significantly worse the norm. Companies with a "D" rating are highly likely to cease activities in the short term (likelihood of default).

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Summary of Statistics by Rating Financial Condition

In the "Statistics" section of ReadyRatios there is a summary table with information about the number of records provided, in accordance with which a particular financial status rating is assigned to the company, taking into account only the reports that are currently stored in the Report Archive.

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