The Financial Health Rating (FHR™) is a consistent analysis metric that allows you to benchmark your company against your peers, track your performance, and demonstrate your strength externally. The rating is a number from 0-100 that indicates the financial health of a company. It is an industry standard for determining a company’s viability.
The FHR is calculated using accounts from a company's financial statements. We use sophisticated profiling techniques to benchmark the financial characteristics of the company against millions of observations. A company’s Financial Health Rating is an accurate and predictive indicator of its future performance as a business partner or supplier. It is used by companies to signal their financial security and to win more business.
FHR Analysis
Based purely on financial statement data (balance sheet, income statement, cash flow statement)
Employs 24 industry models to account for variations in industry-specific risk
Calculated using 62 efficiency ratios and 11 default-resiliency ratios
Company specific, with no broad market sentiment or geo-political data incorporated
What analysis is provided with each FHR?
The FHR is a comprehensive measure of financial risk, and it will always be provided with the following contextual and supporting information:
Risk Level: Five color-coded risk categories aligning to the Financial Health Rating: Very High Risk, High Risk, Medium Risk, Low Risk, and Very Low Risk
Estimated Probability of Default (EPD): The percentage probability that the company will default within the next 12 months
Core Health Score (CHS): A measure of operating and structural efficiency based on the industry-specific analysis of 62 financial ratios. A medium-term indicator of sustainability
Resilience Indicators: Performance measures related to leverage, liquidity, and earnings performance that are aligned with short-term default risk
Financial Period Date: The financial period of the statements used in the underlying analysis
Annual or Quarterly Delta: The change in the rating over the prior 12 or 3 months
FHR Report
The FHR Report provides a deep dive into the financial health of a company as measured by RapidRatings’ analytical models. It presents the company’s current and historical risk trend for up to nine years, as well as its strengths and weaknesses. This report provides the highest level of commentary and in-depth information.
The FHR Report includes the following:
The Financial Health Rating (FHR), Core Health Score (CHS), and Estimated Probability of Default (EPD)
Current and historical analysis of the company's strengths and weaknesses, complete with peer comparisons
Full balance sheets, income statements, and cash flow statements
Liquidity ratio, activity ratio, and cash flow ratio analysis sections
Simulation of the effect of abnormal items
Executive Summary
The executive summary section of the FHR Report provides commentary on various aspects of the company’s performance including core health and default risk. It discusses the interplay of resilience indicators that underpin default risk and core health that drives long-term operational efficiency. We comment on how these impact the short, medium, and long-term outlook for the company.
Financial health is a common language that makes every risk assessment more efficient and effective. |