Download or read book International Corporate Finance Impact of Financial Ratios on Long Term Credit Ratings written by Swen Beyer and published by GRIN Verlag. This book was released on 2010-12 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2010 in the subject Business economics - Investment and Finance, grade: 2,0, Reutlingen University (Business Adminstration), language: English, abstract: The global financial and economic crises resulted for many corporations in a downgraded credit rating within the last 2 to 3 years. Even a large percentage of them defaulted on their credit obligations due to inherent operational factors. The importance of credit ratings will play an even more central role under the currently discussed New Basel Capital Accord (Basel III) (Standard & Poor ́s 2010; Basel III For Global Banks). The purpose of this research is to explore the relationship between long term credit ratings and selected financial ratios that can be derived by public information. Such information can be very valuable for companies in order to have a slight control over their credit rating obtained by rating agencies as well as in negotiations with banks and other outside creditors. The research design is based on three automotive manufacturers and involves their credit rating over the last decade. The data for the financial ratios was collected from respective financial statements. The study is based on a correlation and multiple regression analysis using the MINITAB (Minitab Data Analysis Software, Pennsylvania USA) software as a statistical platform. A step wise approach determined the regression equation with the highest significance. The equations were used to detect those variables that have the strongest impact on the credit rating. The results for automotive companies with a solid statistical data set are surprisingly high in significance with an adjusted coefficient of determination of over 90%. Overall it is not feasible to mention which one of the seventeen financial ratios explains the variation in credit rating most reliable, because such a statement depends always on the individual company. For example to explain the changes in the rating for the Ford Motor

Download or read book International Corporate Finance Impact of financial ratios on long term credit ratings written by Swen Beyer and published by GRIN Verlag. This book was released on 2010-12-01 with total page 101 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2010 in the subject Business economics - Investment and Finance, grade: 2,0, Reutlingen University (Business Adminstration), language: English, abstract: The global financial and economic crises resulted for many corporations in a downgraded credit rating within the last 2 to 3 years. Even a large percentage of them defaulted on their credit obligations due to inherent operational factors. The importance of credit ratings will play an even more central role under the currently discussed New Basel Capital Accord (Basel III) (Standard & Poor ́s 2010; Basel III For Global Banks). The purpose of this research is to explore the relationship between long term credit ratings and selected financial ratios that can be derived by public information. Such information can be very valuable for companies in order to have a slight control over their credit rating obtained by rating agencies as well as in negotiations with banks and other outside creditors. The research design is based on three automotive manufacturers and involves their credit rating over the last decade. The data for the financial ratios was collected from respective financial statements. The study is based on a correlation and multiple regression analysis using the MINITAB (Minitab Data Analysis Software, Pennsylvania USA) software as a statistical platform. A step wise approach determined the regression equation with the highest significance. The equations were used to detect those variables that have the strongest impact on the credit rating. The results for automotive companies with a solid statistical data set are surprisingly high in significance with an adjusted coefficient of determination of over 90%. Overall it is not feasible to mention which one of the seventeen financial ratios explains the variation in credit rating most reliable, because such a statement depends always on the individual company. For example to explain the changes in the rating for the Ford Motor Company, the following six ratios turned out to be the most significant ones: total equity to total assets; sales to fixed assets; sales to inventory; net income to total equity; total equity to long term liabilities and EBIT to sales. Each regression equation consisted mostly of different financial ratios. Apart from the fact that financial information is only one aspect of the credit rating determination process, the attained results are valid and valuable insights for all external and internal rating analysts. The global financial and economic crises resulted for many corporations in a downgraded credit rating within the last 2 to 3 years. [...]

Download or read book The Rating Agencies and Their Credit Ratings written by Herwig M. Langohr and published by John Wiley & Sons. This book was released on 2008 with total page 662 pages. Available in PDF, EPUB and Kindle. Book excerpt: This title is a guide to ratings, the ratings industry, and the mechanics and economics of obtaining a rating. It sheds light on the role that the agencies play in the international financial markets.

Download or read book Credit Rating and the Impact on Capital Structure written by Christian Kronwald and published by GRIN Verlag. This book was released on 2010-03-25 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2009 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,3, University of Hohenheim (Lehrstuhl für Bankwirtschaft und Finanzdienstleistungen), language: English, abstract: The question about capital structure is one of the most important issues which the management of a company faces in implementing their daily business. Therefore, the question of which factors affect capital structure decisions attracts high attention in the past and recent literature on capital structure. There are many papers providing valuable insights into capital structure choices, starting with the paper of Modigliani and Miller (1958). The MM-Theorem is generally considered a purely theoretical result since it ignores important factors in the capital structure decision like bank-ruptcy costs, taxes, agency costs and information asymmetry. Based on this paper many other theories which consider factors neglected by Modigliani and Miller have been evolved. Two major theories are the Tradeoff- and the Pecking-Order-Theory. The former loosens assumptions stated in the MM-Theorem by including bankruptcy costs and taxes while the latter introduces information asymmetry into the capital structure discussion. Chapter 2.1 will give a brief overview of these theories. For complexity reasons these models cannot capture all relevant factors affecting the capital structure policy of a company. However, all these theories disregard one cru-cial factor which plays an important role on capital markets all over the world. The significance of Credit Ratings is gradually increasing, and it is doing so in many re-spects. This paper focuses on the Credit Rating-Capital Structure-Hypotheses (CRCS) developed by Darren J. Kisgen as a modern approach to the capital structure discussion. The hypothesis argues that credit ratings have an impact on capital struc-ture decisions due to discrete costs (benefits) associated with a rating change. Firstly, reasons why credit ratings are material for capital structure decisions will be out-lined. Then, situations in which credit rating effects play a role will be examined. For this issue it is very important to show how it can be measured whether a firm is con-cerned about a rating change or not. Afterwards the CR-CS will be empirically tested. The traditional theories don’t explain the results obtained in these tests. Therefore credit rating effects will be combined with factors discussed in the Tradeoff- and Pecking-Order-Theory. In subsequent empirical tests credit rating factors will be integrated into previous capital structure test to show that the results of the CR-CS tests remain statistically significant...

Download or read book Ratings Rating Agencies and the Global Financial System written by Richard M. Levich and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 380 pages. Available in PDF, EPUB and Kindle. Book excerpt: Ratings, Rating Agencies and the Global Financial System brings together the research of economists at New York University and the University of Maryland, along with those from the private sector, government bodies, and other universities. The first section of the volume focuses on the historical origins of the credit rating business and its present day industrial organization structure. The second section presents several empirical studies crafted largely around individual firm-level or bank-level data. These studies examine (a) the relationship between ratings and the default and recovery experience of corporate borrowers, (b) the comparability of credit ratings made by domestic and foreign rating agencies, and (c) the usefulness of financial market indicators for rating banks, among other topics. In the third section, the record of sovereign credit ratings in predicting financial crises and the reaction of financial markets to changes in credit ratings is examined. The final section of the volume emphasizes policy issues now facing regulators and credit rating agencies.

Download or read book The Rating Agencies and Their Credit Ratings written by Herwig Langohr and published by John Wiley & Sons. This book was released on 2010-04-01 with total page 524 pages. Available in PDF, EPUB and Kindle. Book excerpt: Credit rating agencies play a critical role in capital markets, guiding the asset allocation of institutional investors as private capital moves freely around the world in search of the best trade-off between risk and return. However, they have also been strongly criticised for failing to spot the Asian crisis in the early 1990s, the Enron, WorldCom and Parmalat collapses in the early 2000s and finally for their ratings of subprime-related structured finance instruments and their role in the current financial crisis. This book is a guide to ratings, the ratings industry and the mechanics and economics of obtaining a rating. It sheds light on the role that the agencies play in the international financial markets. It avoids the sensationalist approach often associated with studies of rating scandals and the financial crisis, and instead provides an objective and critical analysis of the business of ratings. The book will be of practical use to any individual who has to deal with ratings and the ratings industry in their day-to-day job. Reviews "Rating agencies fulfil an important role in the capital markets, but given their power, they are frequently the object of criticism. Some of it is justified but most of it portrays a lack of understanding of their business. In their book The Rating Agencies and their Credit Ratings, Herwig and Patricia Langohr provide an excellent economic background to the role of rating agencies and also a thorough understanding of their business and the problems they face. I recommend this book to all those who have an interest in this somewhat arcane but extremely important area." -Robin Monro-Davies, Former CEO, Fitch Ratings. "At a time of unprecedented public and political scrutiny of the effectiveness and indeed the basic business model of the Credit Rating industry, and heightened concerns regarding the transparency and accountability of the leading agencies, this book provides a commendably comprehensive overview, and should provide invaluable assistance in the ongoing debate." -Rupert Atkinson, Managing Director, Head of Credit Advisory Group, Morgan Stanley and member of the SIFMA Rating Agency Task Force "The Langohrs have provided useful information in a field where one frequently finds only opinions or misconceptions. They supply a firm base from which to understand changes now underway. A well-read copy of this monograph should be close to the desk of every investor, issuer and financial regulator, legislator or commentator." -John Grout, Policy and Technical Director, The Association of Corporate Treasurers

Download or read book Working Capital Management Concepts And Strategies written by H Kent Baker and published by World Scientific. This book was released on 2023-03-21 with total page 543 pages. Available in PDF, EPUB and Kindle. Book excerpt: Working capital refers to the money that a company uses to finance its daily operations. Proper management of working capital is critical to financial health and operational success. Working capital management (WCM) aims to maximize operational efficiency by maintaining a delicate balance among growth, profitability, and liquidity. WCM is a continuous responsibility focusing on a firm's day-to-day operations involving short-term assets and liabilities. By efficiently managing a firm's cash, accounts receivable, inventories, and accounts payable, managers can help maintain smooth operations and improve a company's earnings and profitability. By contrast, poor WCM could lead to a lower credit score, financial insolvency, legal troubles, liquidation of assets, and potential bankruptcy.This book provides an objective look into the dynamic world of WCM. Its coverage extends from discussing basic concepts and their applications to increasingly complex and real-world situations. The book stresses that WCM is a combination of both art and science. This volume spans the gamut from theoretical to practical while offering the right balance of detailed and user-friendly coverage. Readers can gain an in-depth understanding of this subject from experts in this field. Those who want a broad survey will benefit, as will readers looking for more in-depth presentations of specific areas within this field of study. In summary, Working Capital Management: Concepts and Strategies provides a fresh look at this intriguing but often complex subject of WCM.

Download or read book Corporate Governance written by Donald Nordberg and published by SAGE. This book was released on 2010-11-15 with total page 290 pages. Available in PDF, EPUB and Kindle. Book excerpt: Offering a fresh look at the commonly accepted view of what constitutes good governance, Donald Nordberg explores the contexts of board decisions and draws upon his academic research and years of business and financial journalism in Europe, North America and Asia to provide a distinctive and pertinent contribution to the literature on corporate governance. The book: - Features 21 detailed case studies, drawn from international examples, to prompt discussion and analysis - Provides topical, up-to-date examples and evidence - Gives attention to the important question "What next for Corporate Governance?" Supporting features include: Case Study questions; "Agenda Point" boxes to provide further analysis and consideration on topical issues; Further readings; Companion Website, featuring online resources.

Download or read book Leverage and Financing of Non financial Companies written by C. E. V. Borio and published by . This book was released on 1990 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Economics of Credit Rating Agencies written by Francesco Sangiorgi and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Economics of Credit Rating Agencies explores the economic and regulatory issues and frictions associated with credit rating agencies in the aftermath of the financial crisis. While ratings and other public signals are important, they can discourage independent due diligence and be a source of systemic risk. The authors highlight the diverse underlying views towards these competing approaches to reducing systemic risk and discuss the subtle contrasts between credit rating agencies and other types of due diligence providers, such as auditors, analysts and proxy-voting advisors. After an introduction, Section 2 provides a broad discussion of ratings in the regulatory framework, as well as how ratings potentially crowd out private information production and the risks associated with overreliance on ratings in market pricing. Section 3 contrasts credit rating agencies with alternative gatekeepers, such as auditors, analysts and proxy-voting advisers. Section 4 describes the difficulty of selling information and the underpinnings of the payment model for various financial information intermediaries under alternative assumptions. Section 5 discusses of rating agency analyst conflict of interest. An important aspect of credit ratings is the feedback effect that arises when a firm's behavior responds to the change in the cost of funding that is influenced by the rating. Feedback effects arise because of contractual triggers, but also through coordination and learning channels. Section 6 discusses these channels and especially the learning channel. Section 7 discusses selection issues including rating shopping and the contrast between solicited and unsolicited credit ratings. Section 8 contrasts ratings across products, including sovereign debt, and rating agencies. The nature of competition and the role of entry and reputation in the credit rating agency space are explored in Section 9. Section 10 examines why ratings matter, as well as techniques for identifying the real effects of ratings. The authors provide concluding observations and takeaways about rating agencies that emerged as a byproduct of the financial crisis in Section 11.

Download or read book The COVID 19 Impact on Corporate Leverage and Financial Fragility written by Sharjil M. Haque and published by International Monetary Fund. This book was released on 2021-11-05 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.

Download or read book The Riskiness of Credit Allocation and Financial Stability written by Mr.Luis Brandao-Marques and published by International Monetary Fund. This book was released on 2019-09-27 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: We explore empirically how the time-varying allocation of credit across firms with heterogeneous credit quality matters for financial stability outcomes. Using firm-level data for 55 countries over 1991-2016, we show that the riskiness of credit allocation, captured by Greenwood and Hanson (2013)’s ISS indicator, helps predict downside risks to GDP growth and systemic banking crises, two to three years ahead. Our analysis indicates that the riskiness of credit allocation is both a measure of corporate vulnerability and of investor sentiment. Economic forecasters wrongly predict a positive association between the riskiness of credit allocation and future growth, suggesting a flawed expectations process.

Download or read book Ratings written by Peter Brusov and published by Springer Nature. This book was released on 2020-12-04 with total page 365 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents new methodologies for rating non-financial issuers and project ratings based on the BFO (Brusov-Filatova-Orekhova) theory of capital cost and structure, and its perpetuity limit (Modigliani-Miller theory), as well as modern investment models created by the authors. It first provides a critical analysis of the methodological and systemic shortcomings of the current credit ratings of non-financial issuers and project ratings. In order to increase the objectivity and accuracy of rating assessments, it then modifies the BFO theory for companies of arbitrary age as well as and the perpetuity limit (Modigliani-Miller theory) for rating needs. The authors also incorporate the financial indicators used in the rating methodology into both the BFO theory and the Modigliani-Miller theory. Within the framework of the modified BFO theory for rating needs, they then present a detailed study of the dependence of the weighted average cost of capital of WACC, used as the discount rate for discounting financial flows, on the financial ratios used in the rating, on the age of the company, on the leverage level and on the level of taxation for a wide range of values of equity cost and debt cost for companies of arbitrary age. This makes it possible to correctly assess of the discount rate, taking into account the values of financial ratios. The use of well-established corporate finance theories (BFO theory and its perpetuity limit) opens up new horizons in the rating industry, providing an opportunity to switch from mainly qualitative methods for determining the creditworthiness of issuers to mainly quantitative methods in rating, and as such improving the quality and accuracy of rating scores.

Download or read book International Corporate Finance written by Laurent L. Jacque and published by John Wiley & Sons. This book was released on 2014-03-07 with total page 885 pages. Available in PDF, EPUB and Kindle. Book excerpt: A thorough introduction to corporate finance from a renowned professor of finance and banking As globalization redefines the field of corporate finance, international and domestic finance have become almost inseparably intertwined. It's increasingly difficult to understand what is happening in capital markets without a firm grasp of currency markets, the investment strategies of sovereign wealth funds, carry trade, and foreign exchange derivatives products. International Corporate Finance offers thorough coverage of the international monetary climate, including Islamic finance, Asian banking, and cross-border mergers and acquisitions. Additionally, the book offers keen insight on global capital markets, equity markets, and bond markets, as well as foreign exchange risk management and how to forecast exchange rates. Offers a comprehensive discussion of the current state of international corporate finance Provides simple rules and pragmatic answers to key managerial questions and issues Includes case studies and real-world decision-making situations For anyone who wants to understand how finance works in today's hyper-connected global economy, International Corporate Finance is an insightful, practical guide to this complex subject.

Download or read book International Corporate Finance Website written by Laurent L. Jacque and published by John Wiley & Sons. This book was released on 2014-03-24 with total page 885 pages. Available in PDF, EPUB and Kindle. Book excerpt: A thorough introduction to corporate finance from a renowned professor of finance and banking As globalization redefines the field of corporate finance, international and domestic finance have become almost inseparably intertwined. It's increasingly difficult to understand what is happening in capital markets without a firm grasp of currency markets, the investment strategies of sovereign wealth funds, carry trade, and foreign exchange derivatives products. International Corporate Finance offers thorough coverage of the international monetary climate, including Islamic finance, Asian banking, and cross-border mergers and acquisitions. Additionally, the book offers keen insight on global capital markets, equity markets, and bond markets, as well as foreign exchange risk management and how to forecast exchange rates. Offers a comprehensive discussion of the current state of international corporate finance Provides simple rules and pragmatic answers to key managerial questions and issues Includes case studies and real-world decision-making situations For anyone who wants to understand how finance works in today's hyper-connected global economy, International Corporate Finance is an insightful, practical guide to this complex subject.

Download or read book Applied Corporate Finance written by Aswath Damodaran and published by John Wiley & Sons. This book was released on 2014-10-27 with total page 663 pages. Available in PDF, EPUB and Kindle. Book excerpt: Aswath Damodaran, distinguished author, Professor of Finance, and David Margolis, Teaching Fellow at the NYU Stern School of Business, have delivered the newest edition of Applied Corporate Finance. This readable text provides the practical advice students and practitioners need rather than a sole concentration on debate theory, assumptions, or models. Like no other text of its kind, Applied Corporate Finance, 4th Edition applies corporate finance to real companies. It now contains six real-world core companies to study and follow. Business decisions are classified for students into three groups: investment, financing, and dividend decisions.

Download or read book International Financial Statement Analysis written by Thomas R. Robinson and published by John Wiley & Sons. This book was released on 2015-01-30 with total page 1064 pages. Available in PDF, EPUB and Kindle. Book excerpt: Better analysis for more accurate international financial valuation International Financial Statement Analysis provides the most up-to-date detail for the successful assessment of company performance and financial position regardless of country of origin. The seasoned experts at the CFA Institute offer readers a rich, clear reference, covering all aspects from financial reporting mechanics and standards to understanding income and balance sheets. Comprehensive guidance toward effective analysis techniques helps readers make real-world use of the knowledge presented, with this new third edition containing the most current standards and methods for the post-crisis world. Coverage includes the complete statement analysis process, plus information on income tax accounting, employee compensation, and the impact of foreign exchange rates on the statements of multinational corporations. Financial statement analysis gives investment professionals important insights into the true financial condition of a company. With it, realistic valuations can be made for investment, lending, or merger and acquisition purposes. The process is becoming increasingly complex, but this book helps readers deal with the practical challenges that arise at the international level. Understand the accounting mechanics behind financial reporting Discover the differences between statements from around the world Learn how each financial statement element affects securities valuation Master analysis for clues into operations and risk characteristics Amid an uncertain global economic climate, in today's volatile international markets, the ability to effectively evaluate financial statements is a critical skill. Standards and conditions are continuously evolving, and investment professionals need a strong, up-to-date resource for the latest rules and best practices. International Financial Statement Analysis provides this and more, with clarity and expert advice.