RapidRatings' Policies on Interim Period Handling
Interim financials play a pivotal role in our rating model and financial health assessment, providing a more up-to-date analysis that reflects the company's recent performance. RapidRatings employs a method that involves analyzing rolling trailing 12-month data to generate a rating comparable to past periods.
Calculation of Interim Periods
RapidRatings produces reports on a trailing-12 month income statement basis. This holds true for any period rated by RapidRatings, including rating assessments done for Q1, Q2, and Q3 periods. This is to keep the ratings consistent regardless of the time of year that the rating analysis is happening. If a trailing-12 month income statement is not provided, then RapidRatings annualizes the trailing 12 months. For the report’s Q1/Q2/Q3 period, we use one of the following methods based on the level of information provided to us:
Current year interim period and prior full year period are provided: In this method, known as a proportional roll, the income statement is annualized by adding the current (X)-month 'interim period' income statement data to a proportion of the prior year end’s income statement data. The proportion of the prior year end’s income statement used in the calculation, depends on how long the current year interim period is. For example: if a company’s current-year interim period is 9 months long, prior year income statement figures are multiplied by the fraction (3/12).
Current year interim period, prior year interim period, and prior full year period are provided: In this method, known as a perfect roll, the annualized interim period figures for any line item on our report can be calculated using this formula: (Current YTD) + (Prior Year end) – (Prior YTD). This formula produces an exact "perfect" trailing 12 month picture of performance.
Only a current interim provided and no prior year data is provided or available: In this scenario, RapidRatings annualizes this period’s income statement by multiplying the actual figures by the ratio: 12 divided by number (#) of months in the period. This is also known as a gross up/down. Note that we will only do a gross up/down if the amount of months provided is greater than or equal to 9 and less than or equal to 15. We do not do gross up/down calculations on any amount of months less or greater than these numbers.
NOTE: it is highly recommended to submit either:
a full trailing 12 months or
both a current year interim period and the equivalent prior year interim period (for a perfect roll)
Submitting one of these will ensure that you are being rated using the most accurate data possible.
Non-Quarterly Period - Financial Data Roll Down
RapidRatings reports are generated only for Q1, Q2, Q3, and YE periods. If a company provides 4-month financials ending in April with a year-end date of December 31st, the date on the report will display as March 31st. However, the FHR score calculation remains unaffected by the displayed date, as the income statement is still annualized using 4 months of the current year's income statement and 8 months of the previous year's income statement.
Former Period Absence on Report
Previously rated periods may not appear on an FHR report due to the following reasons:
The previous period was an interim (Q1, Q2, Q3) and was rated independently without a previous year-end.
The company's year-end date changed.
There is a gap in time between the previously rated periods and the newest periods.