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Moodys Basic Definitions for Credit Statistics

Users Guide
Introduction
This report collects into a single document the definitions for the most common financial terms our Corporate Finance analysts use across the global franchise. These are the building blocks for most of Moody's financial analysis outside of specialized areas such as financial institutions and project finance. Moody's has changed its practice of adjusting financial data through the definition of ratios. Our basic ratios no longer contain complicated add backs to the numerators and denominators but are instead simpler constructs based on fully adjusted sets of financial statements. In general, Moody's adjusts financial statements to better reflect, for analytical purposes, the underlying economics of transactions and events and to improve comparability of a company's financial statements with those of its peers. Our corporate finance analysts make standard adjustments that are stated in the following rating methodologies:

Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Part II: Standardized Adjustments to Enable Global Consistency for Issuers Reporting under International Financial Reporting Standards ('IFRS'), published in February, 2006 (#96729) Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Part III: Standardized Adjustments to Enable Global Consistency for Issuers Reporting under Japanese GAAP, published in October, 2006 (#98842)

In addition to the standard adjustments, analysts will often make non-standard adjustments where they consider such adjustments to be appropriate to reflect the unique requirements of their region or sector. For example, analysts may adjust financial statements to reflect estimates or assumptions that they believe are more prudent for credit analysis. Going forward, our analysts may reference this document in their research to provide greater clarity for the reader.

Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Part I: Standardized Adjustments to Enable Global Consistency for US and Canadian GAAP Issuers, published in February, 2006 (#96760)

Moodys Related Research


Special Comment:

Guideline Rent Expense Multiples for Use with Moodys Global Standard Adjustment to Capitalize Operating Leases, published in March, 2006 (#96830)

Basic Definitions for Credit Statistics


Interest .....................................................Gross Interest Expense per the Income Statement Note that Interest Income is not deducted from Interest Expense. EBIT .........................................................Pretax Income + Interest + Non-Recurring Expenses/(Gains) Note: (1) Income from equity accounted entities may be included in EBIT if required by the relevant Industry Rating Methodology, or where the equity accounted entity is considered to be an integral part of the company's income generating operations and the equity-accounted income is deemed to be sufficiently backed by cash distributions from the equity accounted entities. (2) For Japanese GAAP reporters, income from equity accounted entities is included in reported EBIT but excluded from adjusted EBIT. (3) US GAAP reporters have the option of reporting minority interest either before or after as reported EBIT. Minority interest should be excluded from adjusted EBIT. EBITA .......................................................EBIT + Amortization of Intangibles Note: (1) Income from equity accounted entities may be included in EBITA if required by the relevant Industry Rating Methodology, or where the equity accounted entity is considered to be an integral part of the company's income generating operations and the equity-accounted income is deemed to be sufficiently backed by cash distributions from the equity accounted entities. (2) For Japanese GAAP reporters, income from equity accounted entities is included in reported EBIT but excluded from adjusted EBIT (3) US GAAP reporters have the option of reporting minority interest either before or after as reported EBIT. Minority interest should be excluded from adjusted EBIT EBITDA ....................................................EBIT + Depreciation + Amortization of intangibles Note: (1) Income from equity accounted entities may be included in EBITDA if required by the relevant Industry Rating Methodology, or where the equity accounted entity is considered to be an integral part of the company's income generating operations and the equity-accounted income is deemed to be sufficiently backed by cash distributions from the equity accounted entities. (2) For Japanese GAAP reporters, income from equity accounted entities is included in reported EBIT but excluded from adjusted EBIT (3) US GAAP reporters have the option of reporting minority interest either before or after as reported EBIT. Minority interest should be excluded from adjusted EBIT Assets ......................................................Total Assets per the Balance Sheet Debt .........................................................Short-term Debt + Current Portion of Long-term Debt + Long-term Debt, net of Current Portion + Liability for Capital Leases (if not already included in Debt) Net Debt ..................................................Debt - Cash and Cash Equivalents per the Balance Sheet - Cash-like current financial assets per the Balance Sheet

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Basic Definitions for Credit Statistics (continued)


Capitalization ............................................Debt + Total Equity per the Balance Sheet + Minority interest per the Balance Sheet + Non-Current Deferred Income Taxes per the Balance Sheet Note that, for IFRS and JGAAP reporters, Minority interest is already included in Total Equity per the Balance Sheet. Capital Expenditures ................................Gross expenditures for plant and equipment and intangible assets, per the Investing activities section of the Consolidated Statement of Cash Flow. Funds From Operations (FFO) ..................Cash flow from operations before changes in working capital and changes in other short-term and long-term operating assets and liabilities Cash Flow From Operations (CFO) ...........Cash Flow from Operating activities per the Consolidated Statement of Cash Flow. Note that, for IFRS reporters, interest paid and received, taxation paid and dividends received are included in CFO irrespective of where they are reported in the Consolidated Statement of Cash Flow. Retained Cash Flow (RCF) .......................Funds from Operations (FFO) - Common Dividends per the Consolidated Statement of Cash Flow - Preferred Dividends per the Consolidated Statement of Cash Flow - Minority Dividends per the Consolidated Statement of Cash Flow Free Cash Flow (FCF) ...............................Cash Flow From Operations (CFO) - Capital Expenditures per the Consolidated Statement of Cash Flow - Common Dividends per the Consolidated Statement of Cash Flow - Preferred Dividends per the Consolidated Statement of Cash Flow - Minority Dividends per the Consolidated Statement of Cash Flow

78480/SP4467 / June 2007