Credit Rating and IPO Grading-Concept, Purpose and Procedure

Credit Rating:

Credit rating is the rate of the rating company on the ability and finance position as well as history finance position to pay off the debts. Credit rating estimates all the finance position such as assets and liabilities, balance sheets, long terms assets and liabilities, debt-equity ratio and past of the company to pay the debts. With all these financial instruments, credit rating company gives the rating to the company of which it is rating and tell the investors as well as lenders about the financial position with its rating. Like normally credit rating gives company point 1 to 5 and 5 indicates that company has sound financially position whereas 1 indicates that company has poor financial position.