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The D&B Rating
The D&B Rating

The D&B Rating - one of the most useful tools in deciding the credit terms you offer!

At the heart of the information contained in a Business Information Report is the D&B Rating. This is a coded guide to the risk associated with doing business with a specific company.

Example Part 1 : D&B Rating 5A 4

The Dun and Bradstreet Rating consists of two parts : (a) Financial Strength Indicator (shown in the example as 5A) (b) Condition Code or Risk Indicator (shown in the example as 4)

Financial Strength Indicator

The Financial Strength Indicator is calculated using either the Net Worth or Issued Capital of the Subject Company. If both figures are available, then the Net Worth is always used to calculate the Financial Strength.

Based on Net WorthBased on Issued Capital Figure
5AFinancial Strength of 60 + million5AAFinancial Strength of 60 + million
4AFinancial Strength of 25 - 60 million4AAFinancial Strength of 25 - 60 million
3AFinancial Strength of 12 - 25 million3AAFinancial Strength of 12 - 25 million
2AFinancial Strength of 2.5 - 12 million2AAFinancial Strength of 2.5 - 12 million
1AFinancial Strength of 1.2 - 2.5 million1AAFinancial Strength of 1.2 - 2.5 million
AFinancial Strength of 600,000 - 1.2 millionAAFinancial Strength of 600,000 - 1.2 million
BFinancial Strength of 345,000 - 600,000BBFinancial Strength of 345,000 - 600,000
CFinancial Strength of 175,000 - 345,000CCFinancial Strength of 175,000 - 345,000
DFinancial Strength of 120,000 - 175,000DDFinancial Strength of 175,000 - 345,000
EFinancial Strength of 60,000 - 120,000EEFinancial Strength of 60,000 - 120,000
FFinancial Strength of 35,000 - 60,000FFFinancial Strength of 35,000 - 60,000
GFinancial Strength of 15,000 - 35,000GGFinancial Strength of 15,000 - 35,000
HFinancial Strength of 0 - 15,000HHFinancial Strength of 0 - 15,000

Other codes used:

  • N - Financial Strength is negative
  • O - Financial Strength is undisclosed
  • NB - New Business less than 2 years old
  • NQ - Ceased Trading
The Condition Code or Risk Indicator

This is calculated by taking into account key items within the Business Information report which are used to predict the likelihood of a business failure.

Risk IndicatorProbability of failureGuide to interpretation
1Minimal riskProceed with transaction - offer terms required
2Low riskProceed with transaction
3Greater than average riskProceed with transaction but monitor closely
4Significant level of riskTake suitable assurances before extending credit
5Insufficient information to assign a risk indicatorNo public information or D&B proprietary information available to indicate trading activity

The Risk Indicator in more detail :

  • Strong Condition ( 1 )
    This is assigned to companies of undoubted credit standing and financial strength. The risk associated with being a creditor of these concerns would be negligible or zero, the concern which pays bills promptly or discount.
  • Good Condition ( 2 )
    This is assigned to financially sound concerns, having no known record of bad payments and paying suppliers quickly. The risk of being associated with being a creditor of these concerns would be low and they would be classified as an ordinary trade risk.
  • Fair Condition ( 3 )
    This would be assigned to concerns believed to be financially sound but with a history of slow payments or some losses or working capital deficit. The risk associated with being a creditor of these concerns is higher and would be classified as potentially slow payers or fair trade risk.
  • Poor Condition ( 4 )
    This would be assigned to concerns of known financial weakness. A number of years losses, higher than normal working capital deficit, a negative tangible net worth which is worsening, court judgments, bad payments etc. This risk is associated with being a creditor of these concerns is high or significant.
  • Undetermined ( - )
    This is assigned to concerns where there is insufficient information available to express any opinion on the condition, financial soundness or payment history of the concern. A concern with no telephone number will also be assigned a " - " condition.

Example Part 2: D&B Rating 5A 4

Thus, the example rating shows a Company with a Financial Strength of 60 + million (probably based on Net Worth), in a poor condition with a significant level of risk. The supplier is recommended to get significant guarantees before granting credit.

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