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Sample Reports



 

CRR Reports
There will be two major reports marketed as part of the Corporate Reporting Rating – the CRR system – an institutionally oriented report and, later, a retail or consumer-oriented report which will be a shorter report. Both reports will rate corporate financial reporting and will cover the following areas:

1. Accounting Policies
RateFinancials will review and rate accounting policies based on how conservative or aggressive they are. The range will be five stars for companies with very conservative accounting policies to one star for those with very aggressive/incorrect accounting. Ideally, companies with conservative accounting policies would:
- Expense stock options;
- Limit restructuring charges from ongoing
  o
perations, instead of using them as
  a catch-all for a variety of purposes;
- Limit write-downs of depreciable or
  amortizable operating assets;
- Limit goodwill write-offs on a regular basis
  generated by a continuing stream of
  acquisitions;
- Limit gains and losses from asset sales;
- Limit pension gains, unrealized gains and
  losses from hedging activities, merger
  and acquisition expenses and litigation
  or insurance windfalls from regularly
  impacting earnings.

2. Footnotes

RateFinancials will rate the clarity, accuracy and completeness of the financial footnotes used in the companies’ public reports. If the footnotes are very clear, well written, complete, and accurately cover all issues relevant to a particular company/industry, then the company would receive a strong rating – a 4 or 5 star rating. If, on the other hand, the footnotes are confusing, misleading and/or do not include information that could reasonably be expected, based on a comparison of the peer or industry group companies, then the company would receive a 1 or 2 star rating.

3. Management Discussion and Analysis
RateFinancials will rate the completeness and transparency of the management commentary and reporting in the various financial reports. If company management describes, in detail, its major operations, existing and new products, operating results, deviations from plan, major problems, potential risks, regulatory approvals needed, litigation, management’s future plans and strategy, then that company would receive a strong rating. If, on the other hand, management omits or minimizes discussion of serious or potential problems or conditions impacting earnings, revenues, reserves, expenses, margins, default rates, management, or important issues commented on by other companies in its peer group, then that company would receive a low rating.

4. Areas of Financial Concern or Quality of Earnings
This measure could cover actual or potential financial problems or aggressive accounting practices impacting a company’s revenues, expenses, earnings, margins, write-offs, etc. Areas of concern would be red-flagged.

We will consider key accounting questions, such as: Does cash generated track earnings? Does the company have a pattern of shifting revenues or reporting revenues (revenue recognition issues) before they are earned? Does the company have a pattern of reducing, shifting or capitalizing expenses? Does the company have a pattern of boosting income with one-time gains? Does the company have a history of using discontinued operations write-offs to impact earnings?

Does the company use Special Purpose Entities (“SPEs”)? Do they have a legitimate business purpose? Does the company implicitly guarantee its SPEs? Is that risk reflected on the company’s balance sheet? Does the company use related-party transactions? What is the business purpose and is there full disclosure? Does the company’s management disclose how it makes or changes accounting policy decisions? Does the company disclose the extent of its hedging transactions and derivative financial instruments? Is the financial exposure quantified? Does the company discuss its risk-management philosophy and how it specifically deals with its major risks and exposures?

5. Corporate Governance
RateFinancials would analyze and rate the companies on commonly accepted ’best practices’ of corporate governance. Our analysts’ reviews would include:
- Method of selection and election of outside
  directors
- Adherence to the requirement that
  independent directors and the firms they
  control receive no income for providing services
  or products to the company for which they
  are directors
- Composition and duties of the Audit,
  Compensation and Nominating Committees
- Accessibility to independent legal counsel
  and other expert advice for independent
  directors and audit committees
- Officer compensation compared to its
  peer group
.


Sample Reports
Please Click on the links below to download the pdf of a desired Sample Report (hold the option key if you are using a Mac).

Calpine Corporation Sample Report

Nautilus, Inc. Sample Report


You may also contact RateFinancials directly specifying your name, the name of your company and your contact information
by email: sample@ratefinancials.com
or by phone: 212 957 3000







 
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