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Rating Method Corporation Wikirating Index (CWI)

Similar to the Sovereign Wikirating Index SWI, Wikirating wants to introduce a Corporation Wikirating Index (CWI), a simple, transparent and understandable rating method to assess companies’ credit worthiness. This rating methods for companies should aggregate a few identified and known criteria in order to calculate a reference credit rating.

 

Possible criteria for the CWI

 

Equity-to-fixed-assets ratio

Equity-to-fixed-assets ratio, Shareholder Equity Ratio or fixed asset-to-equity capital ratio (inverse)

Definition

Equity-to-fixed-assets ratio (EFA ratio) is used to help determine how much shareholders would receive in case of a company -wide liquidation. The ratio is calculated by dividing equity capital by fixed assets of the firm, and it represents the amount of assets on which shareholders have a equity claim (also called a residual claim, a claim to a share of earnings after debt obligation have been satisfied). The figures used to calculate the ratio are taken from the company’s balance sheet.

Calculation

{\displaystyle {\text{EFA ratio}}={\frac {\text{Equity Capital}}{\text{Fixed Assets}}}}

 

Scaling factor

 

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