Summary

- Our analysis demonstrates that about one third of sampled German SMEs and MidCaps would be scored BBB or higher purely based on the financial profile, which is a key component of the scorecard in our new SME rating methodology published under TRIBRating.

- A thorough financial profile assessment sometimes requires appropriate adjustments to be made to reported financials by credit analysts. Appropriate analytical adjustments can substantially change the final rating output.

- Business profile risk, sector profile risk and further qualitative factors need to be analysed in addition to the financial profile as part of a rating process for SMEs and MidCaps. A fulsome assessment of these forward-looking rating criteria is essential for obtaining an appropriate evaluation of a company’s credit risk.

- Rigorous ratings of German SMEs and MidCaps combine a robust quantitative model and the expertise of experienced rating analysts.