Criteria | Corporates | General: Methodology And Assumptions: Standard & Poor's Revises Key Ratios Used In Global Corporate Ratings Analysis Dec 11

Standard & Poors, December 2011

Abstract
Applies to corporate ratings, globally. We expect no changes to existing ratings. These criteria are effective immediately for all new and outstanding corporate issuer credit ratings. To establish ratings comparability when evaluating corporate entities, Standard and Poor's uses EBITDA margin as a key ratio. The methodology for analyzing corporate profitability/cash flow is amended in the criteria article "2008 Corporate Criteria: Ratios And Adjustments" as follows: In table 1, replace "Operating income (before D&A) to revenues" with "EBITDA margin"; In table 1, the formula for "EBITDA margin" is "EBITDA/revenues"; In table 2 of the article, delete "Operating income (before D&A)"; Throughout the article, rename "Operating income (after D&A)" as "Operating income". These criteria represent the specific application of fundamental principles that...

Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.

Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.

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