Financial Health Rating

What is the Financial Health Rating?

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The Financial Health Rating (FHR®) is the cornerstone of RapidRatings. The FHR is a single number from 0-100 that indicates the overall financial health of a given company at a glance and is an industry standard for determining a company’s viability.

By using 300,000+ global public and private companies across 24 industry sectors, spanning more than 3 decades to calibrate our model, the FHR is able to project reliable forecasts of the 12-month and long-term outlooks of the companies that touch your business, and predict probabilities of default with proven, high accuracy. We have eliminated the uncertainty of qualitative, market-data driven, payment history and other subjective ratings to provide the only entirely unbiased ratings system in the industry.

The FHR is:

  • Using solely quantitative methods and machine learning techniques that analyze all relevant financial data
  • Rating private financial statements and public company filings
  • Accounting for differences across sector, size, strengths, and weaknesses

 

Free FHR® Report

Want to see how predictive analytics manages risks, mitigates disruptions & protects revenue loss? Request a free FHR report on any public company.

Request Report Now

Financial health is the gateway to understanding a company’s underlying strengths and weaknesses.

Financial health, a measure of a company’s financial viability, operational efficiency, and resilience, is the gateway to understanding the company’s underlying strengths and weaknesses. The 0-100 numeric score provides a universal benchmark for choosing whom to partner with in the short- and long-term, enabling all risk areas to speak one single language for business decisions. A company’s financial health is an accurate and predictive key performance indicator (KPI), instrumental to determining how it will perform as a business partner (vendor, supplier, credit counterparty, or other third party). Financial health provides forward-looking visibility into a company’s ability to grow with you when business is good, weather unforeseen disruptions as they arise, and its capacity to invest in infrastructure and resources, both financial and non-financial.

 

What does it mean to evaluate financial health?

Financial health is often used to describe many different types of ratings and analytics, but at its core, financial health means evaluating a company’s financial statements.  The financial statements alone can reveal many aspects of a company, including:

  • Profitability
  • Operating efficiency
  • Earnings
  • Liquidity
  • Leverage
  • Debt Coverage
  • Probability of Default (12 months to 10 years)

The financial health of a company does not include share price or market inputs, which are a reflection of investor sentiment rather than a company’s financial strength.

 

Financial health helps you navigate the complexity of third-party business relationships.

How can financial health help you make better business decisions with your third parties, including suppliers, vendors, counterparties, and other business partners?

  • Provide early warnings of future performance or potential disruption issues before they occur
  • Support strategic decision making to take risk mitigation action and/or adjust your business relationship strategy
  • Help identify which existing third parties are most capable of improving their performance
  • Select businesses at the procurement or sourcing stage that are most likely to contribute positive performance where you have no relationship history
  • Act as a universal metric to create a common language for managing risk across your enterprise
  • Build better relationships with third parties due to increased transparency and work together towards a shared goal
  • Understand third parties that have the ability to both react to unexpected risk events and proactively prevent potential issues
  • Shape your supplier, third party, and vendor relationship strategy

 

 

 

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