Robust and less complex corporations are not only prepared to face the volatility and turbulence of markets, they are also more governable, more efficient and generally more profitable and sustainable.
Universal Ratings provides Resistance to Shocks ratings and business complexity measures based on the following quarterly fundamentals:
- Income Statement
- Balance Sheet
- Cash Flow
It is suggested to use the past twelve quarters in order to conduct a significant rating.
As an example, the Resistance to Shocks rating of a large retail bank, based on 12 quarterly Standardized Balance statements is illustrated below (data source:Bloomberg):
Resistance to Shocks (%): 75.3
RtS Rating (1-5): 3-star
Relative Complexity (%): 66%
NB. When relative complexity approaches values close to 100%, the business is dominated by uncertainty, hence fragile and difficult to govern.
The business Complexity Profile, which ranks Balance Sheet entries in terms of how each one impacts business complexity and Resistance to Shocks, is illustrated below.
In order to alter the complexity and Resistance to Shocks of a business it is necessary to work with the entries at the top of the above chart. Enries close to the bottom of the chart may, however, impact performance but not complexity and/or Resistance to Rhocks.
The above information is provided on a quarterly basis by our rating robot. Contact us in order for information on how to obtain your RtS rating.
Download example of RtS Rating report of major companies listed on the S&P, Dow and the NASDAQ.