Credit ratings methodology

Credit Ratings MethodologyCredit Ratings Methodology

Credit Ratings Methodology

Business Risk Profile

Analysis

FinancialRisk Profile

Analysis

Business Risk

Country Risk

Company Position

Industry Factors

Profitability / Peer GroupComparisons

• Political • Economic• Industry – Specific factors• Foreign exchange

• Industry Trends• Industry Structure• Market Size• Growth Potential• Cyclicality• Bases of Competition• Changing Technology• Operating Risk• Regulatory Environment

• Competitive Factors• Market position• Keys to Success• Size• Diversification• Management

• Validation of “Company Position”

• Trends• Quality of Earnings

& Analytical adjustments• Peer Group Comparisons

FinancialRisk

Accounting

Cash Flow Adequacy

Governance Risk

Liquidity / Short-term

Factors

• Accounting Regime • Reporting & Disclosure• Analytical adjustments

• Ownership• Board of directors• Management practices• Financial Strategy• Risk Tolerance• Accounting Practices• Internal controls

• Focus on debt service capability

• Analytical distinctions with profitability

• Cash flow measures / • ratios

• Operating sources & uses Of liquidity

• Other potential calls on Liquidity

• Debt Characteristics• Bank credit facilities

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