Rating Agency

A ratings agency is a firm that attempts to provide a rating for the credit-worthiness of a corporation, government or bond. The more likely the borrower is to repay, the higher credit rating they receive.

The 3 largest credit ratings agencies in the world are:

• Moody's
• Standard & Poors
• Fitch

Typically, anything assigned a rating of AAA, AA, A or BBB is deemed to be of investment grade whilst anything below is junk (i.e. very risky and unlikely to pay off).

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium