Methodology
Rating methodologies
A true and fair opinion is our responsibility. Every NCR rating is produced under a published methodology setting out exactly how the opinion is arrived at.
NCR gives an opinion as to the ability of an entity to meet its financial obligations. The rating process concentrates on business and financial risks, focusing on cash generation capability and its adequacy to meet debt obligations on a timely basis.
Our analytical framework divides into two interdependent segments: operational characteristics and financial characteristics. We use both qualitative and quantitative analysis. Analysis typically involves at least three years of operating history and financial data, as well as forecasts of future performance, and a company's performance is compared with others in the same industry. A sensitivity analysis then assesses the company's capacity to cope with changes in its operating environment.
Limitations of ratings
Credit rating provides an independent and fair opinion on the creditworthiness of an entity or instrument. Ratings are not an indication of how secure an investment is as a store of wealth, and are not recommendations for investment. They do not evaluate the reasonableness of an issue price, possibilities for capital gains, or liquidity in the secondary market. The rating is essentially an opinion on the relative quality of the credit risk.