D&B rating is one of the most useful tools when deciding on lending terms!
This is a brief indication of the risk involved in doing business with the company.
Example (Part I) - D&B rating 5A 4
The D&B rating consists of two parts: Financial condition indicator (shown as 5A in the example) Risk indicator (shown as 4 in the example).
Financial position indicator
The financial position indicator is determined on the basis of equity or shareholders' capital of the surveyed company.
If both figures are available, then equity is used first to determine the financial position.
|Based on equity||Based on shareholders' equity|
|5A||Financial position 60 + million||5AA||Financial position 60 + million|
|4A||Financial position 25 - 60 million||4AA||Financial position 25 - 60 million|
|3A||Financial position 12-25 million||3AA||Financial position 12-25 million|
|2A||Financial position 2,5-12 million||2AA||Financial position 2,5-12 million|
|1A||Financial position 1,2-2,5 million||1AA||Financial position 1,2-2,5 million|
|A||Financial position 600,000-1,2 million||AA||Financial position 600,000-1,2 million|
|B||Financial position 345,000 - 600,000||BB||Financial position 345,000 - 600,000|
|C||Financial position 175,000 - 345,000||CC||Financial position 175,000 - 345,000|
|D||Financial position 120,000 - 175,000||DD||Financial position 175,000 - 345,000|
|E||Financial position 60,000 - 120,000||EE||Financial position 60,000 - 120,000|
|F||Financial position 35,000 - 60,000||FF||Financial position 35,000 - 60,000|
|G||Financial position 15,000 - 35,000||GG||Financial position 15,000 - 35,000|
|H||Financial position 0 - 15,000||HH||Financial position 0 - 15,000|
Other codes to use:
Meanings of risk indicator
The meanings of the risk indicator are determined using those sections of the Business Report that indicate how the company fulfills its obligations.
|Risk indicator||Risk of default||Interpretation|
|1||Minimal risk||Possible cooperation on the proposed terms|
|2||Low risk||Cooperation possible|
|3||More than medium risk||Cooperation is possible, but constant monitoring of the company's financial condition is required|
|4||High risk||Special guarantees must be obtained before crediting|
|5||Insufficient. Too little information for decision making||D&B does not have public or other relevant information to determine the company's activity|
More about the Risk Indicator:
Example, (Part II): D&B Rating 5A 4
Thus, in this example, the rating offers a company with a financial position of 60+ million (apparently founded with equity) and in poor conditions with a significant level of risk. It is recommended that the supplier obtain appropriate guarantees before lending.