Credit Standards Index
Standards have and always will form the basis of decision making in business. Standards, along with structure, also play a key role in the credit and accounting functions. The aspiration and achievement of true success, in large part, depends on a commitment to excellence derived from standards.
The Credit Standards Index (CSI) is a comprehensive analysis and ranking of 2,036 publicly-traded companies with a minimum market capitalization of $100 million and an accounts receivable that is at least 6% of revenue. The credit standards of each company are defined by the following five equally weighted standards-based criteria:
- Bad debt allowance (BDA) - BDA is a standards measurement that provides keen insight into the credit standards and management acuity level of a company.
- Days' sales outstanding (DSO) - DSO is an effeciency ratio that measures the average number of days for a given period that it takes for a company to turn its accounts receivable into cash.
- Net cash from operations as a percent of revenue - Operating cash is the truest indicator of viability, solvency and credit standards within a company.
- Current ratio - A liquidity ratio long used by banks and creditors in determining credit worthiness.
- Total assets divided by total liabilities - Also known as debts-to-assets, this solvency ratio provides valuable insight into the long-term debt, credit standards and management acuity of a company. Typically, an inverse relationship exists between cash and debt.
The index offers practitioners in credit, accounting and finance the following:
- Identification and understanding of what constitutes credit standards
- Accurate and unbiased aggregate and industry benchmarks
- Comprehensive industry groupings based on SIC codes
- First ever ranking of companies and industries based on credit standards
The Credit Standards Index of 2,036 publicly-traded companies takes benchmarking, statistical analysis, industry data and company data to a new level of accuracy and dependability.
The CSI consists of the Company Index, Industry Index, and Company Profiles. This is a sample of the Company Index:
To view the entire CSI please subscribe.
