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Synthetic Financial Ratings Calculator  
       
Use this tool to calculate the financial rating of a company you are looking to invest in.
  
Enter cells highlighted in yellow    
       
Inputs for synthetic rating estimation   
Enter the type of firm =(Enter 1 if large manufacturing firm, 2 if smaller or riskier firm, 3 if financial service firm)
Enter current Earnings before interest and taxes (EBIT) =(Add back only long term interest expense for financial firms)
Enter current interest expenses =  (Use only long term interest expense for financial firms)
Enter current long term government bond rate =  
       
Calculations:      
Interest coverage ratio =   
Estimated Bond Rating =    
Estimated Default Spread =   
Estimated Cost of Debt =    
       
       
For large manufacturing firms     
If interest coverage ratio is     
>= toRating isSpread is   
-1000000.199999D10.00%   
0.20.649999C7.50%   
0.650.799999CC6.00%   
0.81.249999CCC5.00%   
1.251.499999B-4.25%   
1.51.749999B3.25%   
1.751.999999B+2.50%   
22.499999BB2.00%   
2.52.999999BBB1.50%   
34.249999A-1.25%   
4.255.499999A1.00%   
5.56.499999A+0.80%   
6.58.499999AA0.50%   
8.5100000AAA0.20%   
       
For smaller and riskier firms     
If interest coverage ratio is     
greater than= toRating isSpread is   
-1000000.499999D10.00%   
0.50.799999C7.50%   
0.81.249999CC6.00%   
1.251.499999CCC5.00%   
1.51.999999B-4.25%   
22.499999B3.25%   
2.52.999999B+2.50%   
33.499999BB2.00%   
3.54.499999BBB1.50%   
4.55.999999A-1.25%   
67.499999A1.00%   
7.59.499999A+0.80%   
9.512.499999AA0.50%   
12.5100000AAA0.20%   
       
For financial service firms     
If long term interest coverage ratio is    
greater than= toRating isSpread isOperating
Income
Decline		  
-1000000.049999D10.00%-50.00%  
0.050.099999C7.50%-40.00%  
0.10.199999CC6.00%-40.00%  
0.20.299999CCC5.00%-40.00%  
0.30.399999B-4.25%-25.00%  
0.40.499999B3.25%-20.00%  
0.50.599999B+2.50%-20.00%  
0.60.799999BB2.00%-20.00%  
0.80.999999BBB1.50%-20.00%  
11.49999A-1.25%-17.50%  
1.51.99999A1.00%-15.00%  
22.49999A+0.80%-10.00%  
2.52.99999AA0.50%-5.00%  
3100000AAA0.20%0.00%  

Automatic recalculation 


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