Top 10 Financial Ratios Rating Agencies Look At

A practical shortlist of the ratios that appear most consistently across Indian rating rationales, regardless of sector.

The Shortlist

•      1. Total Debt / EBITDA (or Net Debt/EBITDA) — overall leverage relative to earnings

•      2. Interest Coverage Ratio — ability to cover interest from operating earnings

•      3. Debt Service Coverage Ratio (DSCR) — ability to cover interest and principal together

•      4. Debt-to-Equity Ratio — balance-sheet leverage relative to shareholder funds

•      5. EBITDA Margin — core operating profitability

•      6. Current Ratio — short-term assets relative to short-term liabilities

•      7. Cash Flow from Operations relative to Total Debt — cash-based repayment capacity

•      8. Receivable Days and the broader working capital cycle

•      9. Return on Capital Employed (ROCE) — efficiency of capital deployment

•      10. Free Cash Flow — cash left after capital expenditure, available for debt reduction

How to Use This List

Companies preparing for a rating exercise can use this shortlist as a self-assessment starting point — computing each ratio for the last three years and comparing the trend against sector peers gives a reasonably accurate preview of how an analyst is likely to view the financial risk profile.

Talk to FinMen Advisors — for help preparing for a rating exercise, write to marketing@finmen.in or call +91 77387 14680.

Disclaimer: This article is intended for general informational and educational purposes only and does not constitute financial, credit, investment, or legal advice. Credit ratings are assigned solely by SEBI-registered Credit Rating Agencies (such as CRISIL, ICRA, CARE Ratings, India Ratings, Brickwork, Acuite, and Infomerics) based on their own methodologies, policies, and the information available to them at the time of assessment. FinMen Advisors provides preparatory and advisory support to companies undergoing a rating exercise and does not issue, influence, or guarantee any rating outcome. Readers should exercise independent judgement and consult qualified professionals before making business or financial decisions.