Debt Ratings

I presented a course on IFRS this week that went well. On the final day, however, we looked at analysing financial information. As part of that I shared a table that showed the thresholds for the S&P Debt Ratings: you know, AAA, AA, A, BBB, BB, B …

As part of the overall discussion we also discussed the communication of information … here is what I did to the S&P table and then how I extended the example by adding data for BP to see if we could estimate their S&P Debt Rating.

Table: basic data

 

Graph: basic data

I chose to create a 100% Stacked Column chart from this table:

 

I think that’s very effective. However, the question is whether it is a practical graph in terms of using it to try to assign an S%P Debt Rating estimate to the data for a company. Look at the following two graphics, relating to the data for BP for their 2011 financial year, data courtesy of http://www.ft.com

Table: BP data added

 

Graph: BP data added

 

From this presentation, it looks to me as if BP scores AAA for two out of the four measures, AA- for another and BB for the final measure … do you agree with my analysis?

Do you find this presentation useful? Let me know!

Duncan Williamson