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Analyzing Agricultural Inventories Nov 00
Standard & Poors, Nov 2000
Abstract
Standard & Poor's approach to analyzing agricultural commodity inventories recognizes the strong liquidity of these assets. This unique strength is viewed as an important offset to the industry's earnings volatility, and is a key factor in determining ratings. The characteristics of many agricultural inventories such as tobacco, sugar, and grains are quite different from inventories in other industrial sectors. For example, sugar inventories benefit from the government's price support program, which sets a floor price. Leaf tobacco processors' inventories are supported by government programs that limit tobacco production and set base prices for different grades of tobacco. In addition, most of these inventories are contractually committed to specific customers, thereby offsetting a portion of a firm's short-term debt. Further, agricultural...
Companies mentioned in this report are: ConAgra Foods Inc.,Cargill Inc.
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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