Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Long Term LAAA LAA+ LAA LAALA+ LA LALBBB+ LBBB LBBBLBB+ LBB LBBLB+ LB LBLC+ LC LCLD
Short Term
Investment grade
A1+ A1 A2 A3
A4 A5
The key factors ICRA considers while assigning a rating to a Commercial Paper programme are discussed in the following sections.
Business Risk
The business risk that an issuer is exposed to is a combination of the industry risk in its major product segments and its competitive position within the industry.
Financial Risk
The objective here is to determine the issuers current financial position and the adequacy of its future cash flows vis--vis its debt servicing obligations. Some of the aspects analysed in detail in this context are: Operating profitability: The analysis here focuses on determining the trend in operating profitability and how the same appears by peer comparison. Gearing: The objective here is to ascertain the level of debt in relation to own funds, and is viewed in conjunction with the business risks that the issuer is exposed to. Debt Service Coverage ratios: Here, trends in key debt service coverage ratios like Interest Coverage and Net Cash Accruals/Total Debt are examined. Working Capital intensity: The analysis here evaluates the trends in the issuers key working capital indicators like receivables, inventory and creditors, again with respect to peers in the same industry. Accounting quality: Here, the accounting policies, notes to accounts, and auditors comments are reviewed. Any deviation from the Generally Accepted Accounting Practices is noted and the financial statements of the issuer are adjusted to reflect the impact of such deviations. Contingent liabilities/Off-balance sheet exposures: In this case, the likelihood of devolvement of such exposures in the short term and the consequent financial implications are evaluated.
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