How is credit rating done for an enterprise?
CMA A.K.ROY
(SERVICE)
(188 Points)
Replied 25 October 2008
Credit rating by banks differ from banks to bank. Banks follow on line credit rating on specified software or excel based software.
Marks are given on various factors ;
-Financial data i.e. Current ratio, DER, Profitability trend, sales achievement trend etc.
-Marketing data etc.
-Value of account etc.
If any enterprise get say 85% marks grading are made Like B,BB,BB+,A,AA,AA+ etc.
say on 85 % marks CREDIT RATING is A.
BASED ON CREDIT RATING BANK FIXES RISK FACTOR.
NO RISK,AVERAGE RISK.HIGH RISK ETC.
Based on A, Interest rated are fixed :
FOR CC LIMIT : BPLR-1%
FOR T/L : BPLR+.050%-15
ETC.
CMA A.K.ROY
Based on
S.Srinivasaraghavan
(Chief Financial Officer and Co)
(11318 Points)
Replied 31 October 2008
Credit rating done by agencies take into account various parameters like promoter's background, their track record in other companies. Company's standing inthe industry, product, etc.
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