Credit Rating

  1. 2. 3. 4. 5. 6. 7.  1. 2. 3. 4.  1. Introduction Importance Credit risk profile Saves time Better choices Raise funds at cheaper rate Marketing tool Decisions relating to lending and investments Monitoring

Growth of Credit Rating Industry in India CRISIL ICRA CARE Fitch Ratings India Private Limited Rating Methodology Business Analysis o Industry risk o Market position o Operating efficiency o Legal position 2. Financial Analysis o Accounting quality o Earnings protection o Cash flow adequacy o Financial flexibility 3. Management Evaluation 4. Fundamental Analysis o Liquidity management o Asset quality o Profitability and interest o Tax sensitivity  1. 2. 3.  1. 2. 3. Rating Symbols High investment grades: AAA, AA Investment grades: A, BBB Speculative grades: BB, B, C, D Limitations Credibility questionable Confusion: revision, difference in rating of two instruments Process is compromised

4. No correct prediction .

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