Frequently Asked Questions - Report Content

What is the difference between "Standard" and "Detailed" financials?

"Standard" financials aggregates similar line items within major categories and displays a summary of the key items. Standard financials facilitate cross-company comparisons. "Detailed" financials offers a line-by-line account of a company's annual and quarterly financial statements similar to what is actually reported by the company.

For example, if a company reports Product Sales and Service Revenues as separate line items our Standard report will only have a line item for Revenue but our "Detailed" report will have both line items displayed.

What are "Unprocessed Financials?"

Unprocessed financials are extracted from a company's SEC Filings, usually within a few days of the filing.  They are provided by a third party source, and are not necessarily compatible with our normal financials, therefore we can not integrate them into our report scores or ratios, or use them in peer analysis.  We provide them "as is," in an effort to make the most current information available to you within our reports.

What does "YTD" mean under the Year-to-Year section?

Year-to-Date ("YTD") represents activity since the start of a company's fiscal year.

What does "Comp" mean under the Year-to-Year section?

Comparative ("Comp") represents activity for the current period versus the prior comparable period, and the current year-to-date period versus the prior comparable year-to-date period.

Why do some companies not show Z" Scores?

The following is a guide to determine why we are not reporting a Z" Score for a particular company for one or more quarters.
  1. Companies that report quarterly financials should have a Z" Score menu item under "Risk Ratings" in the left menu.  If available, this page shows the Z"-Score formula and the most recent quarterly data used to calculate the score.  If any of the bolded rows show an "n/a," then scores cannot be calculated for that period.

  3. If the company does have historic scores, then go to the Company's most recent Sequential Quarters Standard Balance Sheet.  At the very bottom of the page we note the source of the most recent quarter's information - i.e., was it created from a Press Release as opposed to an SEC filing (e.g., Form 10-Q or Form 10-K).  It is very common for Press Releases to contain abbreviated financial statements.  If the most recent quarter does not have a value for "Retained earnings/accum. deficit" we cannot compute either score.  This is the most common reason that a company doesn't have a current score.  When our database is updated for the actual SEC filing, we will get this value and will be able to calculate the scores.

  5. If there are NO historic scores, it could be one of two common reasons. First, the company may not report Retained Earnings (see #2 above - Target Corporation is an example of a company that does not break-out the components of stockholders' equity in its quarterly filings).  The second common reason is that the company is in an industry that does not report a classified balance sheet (i.e., it does not differentiate between current and long-term assets and liabilities).  The scores use working capital as one of their components, and this cannot be computed if the company does not report a classified balance sheet. Financial Service companies and conglomerates with financial services divisions (e.g., Ford Motor and GE) generally do NOT differentiate their balance sheets, and therefore will not have any scores.


Why do some companies have current assets and current liabilities while others do not?

Not all companies prepare a so-called "classified balance sheet." We will differentiate between short-term and long-term balance sheet items in accordance with the filing format used by the company in question. Companies where a majority of their revenues and/or business is derived from Financial Services or Banking operations will usually not distinguish between short term and long-term balance sheet items

Why are the Liquidity Ratios missing for some companies?

Liquidity ratios will not be available for companies that do not differentiate between short term and long-term asset and liabilities items. Companies where a majority of their revenues and/or business is derived from Financial Services or Banking operations will usually not distinguish between short term and long-term balance sheet items

How do you interpret the Auditor Opinions?

Unqualified -- The Auditor's opinion on the financial statements is given without any reservations. Such an opinion basically states that based upon their examination the auditor feels the company's financial statements were prepared in accordance with generally accepted accounting principles and accurately reflect the results of operations and financial condition of the company for the period audited.

Unqualified with Explanation -- Is a Unqualified opinion with one of the following explanatory issues:

  • Part of audit was performed by another auditor
  • Departure from an accounting principle
  • Uncertainties exist
  • Lack of consistency
  • Going-concern considerations
  • Emphasis of a matter that occurred subsequent to the financial statement date

Adverse Opinion -- Expression of an opinion in an Auditor's report which states that Financial Statements do not fairly present the financial position, results of operations and cash flows in conformity with Generally Accepted Accounting Principles (GAAP).

Qualified -- the Auditor's opinion of a financial statement for which some limitations existed, such as an inability to gather certain information or a significant upcoming event which may or may not occur; opposite of unqualified opinion.

No Opinion -- the Auditor does not express an opinion regarding the financial statements. This occurs in the case where the scope of the audit was insufficient.

Unaudited -- Financial Statements which have not undergone a detailed Audit examination by an independent Certified Public Accountant (CPA)

What are "Obligations?"

Executive Summary

"Obligations" reporting is required by the SEC in U.S. companies' annual 10-K/KSB reports, and similar information is required in many other nations. This information helps credit analysts (and investors) to anticipate how a company expects to use cash in the years to come, based on its contractual obligations. Credit analysts find this information especially useful in circumstances when (a) obligations are anticipated to be unusually large or significantly diminish within a two or three year period (e.g., the subject company faces a "spike" in long-term debt coming due next year), or (b) a significant trend in reported obligations is evident (e.g., each new reporting year shows significant additions to long-term debt).


  1. Where to find it.  Obligations information is located under the Annual Financials tab, in a new sub-tab called, "Obligations".  Since this information is only required to be reported on the annual 10-K/KSB filings, quarterly information will not be available.
  2. The source.  As stated above, for U.S. companies, this information is derived from the Management's Discussion and Analysis ("MD&A") section of annual 10-K/KSB reports.  Pursuant to SEC rules, in each annual 10-K/KSB report, a company must include a "tabular disclosure of contractual obligations" as part of its MD&A.  This disclosure provides investors with an understanding of the timing and amount of specified contractual obligations, which are amounts the reporting company has agreed to pay in the future, and which might be financially significant. 
  3. What information is included?  The SEC rules require a company to disclose as of the latest fiscal year-end balance sheet date its known contractual obligations broken out by:
    1. Long-term debt obligations (i.e., payment obligations under long-term borrowings, usually owed to banks or bond holders)
    2. Capital lease obligations (i.e., a payment obligation under a lease classified as being a capital lease pursuant to FASB Statement of Financial Accounting Standards #13 - for accounting purposes the transaction is viewed as an installment purchase as title typically vests with the lessee at the expiration of the lease)
    3. Operating lease obligations (i.e., off-balance sheet obligations where title does not pass at the expiration of the lease term, usually for such items as real estate or equipment)
    4. Purchase obligations/ Other (not widely reported outside of the U.S., this category would include such items as long term supply contracts)

    The disclosure rules require that amounts in each of these categories be shown by various age categories (i.e., payments due within 1 year, payments due 1-3 years, payments due 3-5 years, and payments due in more than 5 years). 

  4. CRMZ value-added and other notes.  We hope and expect this new addition will save time for our customers, by enabling them to find this information instantly.  In addition, pre-computed ratios are shown comparing reported future obligations against each company's free cash flow for the reported (then current) fiscal year.  For most non-financial companies, these ratios will provide a frame of reference, a rough measure of the company's ability to pay these future obligations.  (Note that financial companies may "fund" at least some of their future debt obligations with cash that comes from debt repayments from borrowers.) 

What is the significance of the "Management Discussion & Analysis" section?

Management Discussion & Analysis (MD&A)

Every annual report, quarterly report or registration statement filed with the SEC is required to contain an MD&A for the periods covered by the financial statements included in the filing. The MD&A is a discussion of results of operations, liquidity, capital resources and other information necessary for understanding a company's financial condition, changes in financial condition and operating results:

  1. Results of operations -- a company should describe any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to which income was so affected. In addition, the company should describe any other significant components of revenues or expenses that, in its judgment, should be described in order to understand its results of operations.
  2. Liquidity -- a company should identify any known trends or any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in its liquidity increasing or decreasing in any material way. If a material deficiency is identified, the company should indicate the course of action taken or proposed to take to remedy the deficiency. Also the company should identify and separately describe internal and external sources of liquidity, and briefly discuss any material unused sources of liquid assets.
  3. Capital resources -- a company should describe its material commitments for capital expenditures and indicate the general purpose of such commitments and the anticipated source of funds needed to fulfill such commitments. Further, it should describe any known material trends, favorable or unfavorable, in its capital resources as well as indicate any expected material changes in the mix and relative cost of such resources. The discussion shall consider changes between equity, debt and any off-balance sheet financing arrangements.

The MD&A is intended to provide, in one section of the filing, narrative disclosure of material historical and prospective information that enables investors to assess the financial condition and results of operations of the issuer, with particular emphasis on its future prospects. The SEC requires a narrative explanation of the financial statements, because it believes that the numerical presentation and accompanying footnotes contained in the financial statements may be insufficient for an investor to judge the quality of an issuer's earnings and the likelihood that past performance is indicative of future performance.

The SEC has designed the MD&A requirement to give investors an opportunity to look at the company through the eyes of management. For that reason, management is required to identify and analyze qualitative and quantitative factors necessary for an understanding and evaluation of an issuer's history and prospects, in both the short term and long term. Since the SEC considers the MD&A requirement one of the most significant disclosure requirements, it reviews a company's response carefully and often issues comments seeking clarification or further explanation.

What do the various "Sources" of financial statements mean?

CreditRiskMonitor provides the "Source" for every financial statement on our site, so you can see where the data originated. The most common sources are:
  • 6-K -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from a report filing submitted by a foreign registrant company. A Form 6-K filing is a required submission for all information that a foreign company issues to its local securities regulators, investors or stock exchanges. As such, the Form 6-K is a catch-all for material information that arises in between annual and quarterly financial reports, which are also submitted to the SEC.
  • 8-K -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from a filing submitted by a registrant company. This form is required for material events at a company that do not arise at the exact time that quarterly or annual filings are made.
  • 10-K or 10-K/A -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from an annual report filing submitted by a registrant company. The annual report on Form 10-K provides a comprehensive overview of the company's business and financial condition and includes audited financial statements. Note that the Form 10-KSB is no longer used by "small businesses" to report their annual results.
  • 10-Q or 10-Q/A -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from an interim (quarterly) report filing submitted by a registrant company. The quarterly report on Form 10-Q includes unaudited financial statements and provides a continuing view of the company's financial position during the year. The report must be filed for each of the first three fiscal quarters of the company's fiscal year. Note that the Form 10-QSB is no longer used by "small businesses" to report their quarterly results.
  • 20-F or 20-F/A -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from a registration statement or annual report filing submitted by a foreign registrant. This report provides information about the company's business operations, the products it makes or the services it provides, and includes audited financial statements.
  • Annual Audited Accounts -- See ARS
  • ARS -- Usually from an official source such as a (non-U.S.) regulatory agency or stock exchange, but sometimes from a company's website, this is a company's published Annual Report.
  • FFIEC -- The U.S. Federal Financial Institutions Examination Council is the ultimate source of this information about U.S. banks. This umbrella organization accepts filings from several U.S. banking agencies including the U.S. Federal Reserve (FRB), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS). In the case of FDIC data, this data is from "Call Reports" filed by the banks with this regulator. For more information, visit the FFIEC Home Page
  • FR Y-9C -- The ultimate source of this information about U.S. bank holding companies is the Federal Reserve (FRB). These are quarterly filings. This form is for bank holding companies that report consolidated financials, i.e., their financials include the financial results of its subsidiary bank(s).  For more information, visit the Federal Reserve's Form FR Y-9C
  • FR Y-9LP -- The ultimate source of this information about U.S. bank holding companies is the Federal Reserve (FRB). These are quarterly filings submitted by U.S. large bank holding companies (i.e., assets greater than $500 million). This filing type contains holding company-only financials (i.e., their financials do not include the financial results of its subsidiary banks).  For more information, visit the Federal Reserve's Form FR Y-9LP
  • FR Y-9SP -- The ultimate source of this information about U.S. bank holding companies is the Federal Reserve (FRB). These are semi-annual filings, submitted by U.S. small bank holding companies (i.e., assets under $500 million). This filing type contains holding company-only financials (i.e., their financials do not include the financial results of its subsidiary banks).  For more information, visit the Federal Reserve's Form FR Y-9SP
  • Interim Report -- Usually from an official source such as a (non-U.S.) regulatory agency or stock exchange, but sometimes from a company's website, this is a company's published Interim Report. In many countries, these reports are filed/released semi-annually not quarterly.
  • N-30B, N-30D, etc. -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from an annual report filing submitted by a registrant investment company, such as a mutual fund. It is semi-annual and concerns the fund's performance, and must be filed within 10 days of sending this information to shareholders.
  • N-CSR -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from a report filing submitted by a registered management investment company, such as a mutual fund. This form must be submitted within 10 days of sending annual and semi-annual reports to stockholders.
  • Press -- Data is extracted from a company's press release. Press release data is often incomplete (for example, it may not include a Statement of Cash Flows). Press release data can be timelier than a regulatory filing, since press releases are often posted before the regulatory filing is made.
  • Prospectus -- A formal legal document which is filed with the securities regulatory agency in the country in which an entity plans to register its securities prior to their sale to the public. A prospectus provides details about the investment offering as well as historical financial results of the entity.
  • Tanshin -- This data is released by public companies in Japan as "flash reports".
  • Yuho -- This data ultimately sourced from the Japanese Financial Services Agency, the Japanese equivalent of SEC filings in the U.S. These are filings required of all publicly traded companies as per Japan's securities laws.
  • X-17A-5 -- The U.S. Securities and Exchange Commission's electronic database ("EDGAR") is the ultimate source, from the financial and operational combined report required to be filed submitted by a broker-dealer on a quarterly and annual basis.
  • Other -- Most other designations are also U.S. Securities and Exchange Commission source documents, see for details.

How are trailing 12-month values computed?

Trailing 12-month ("TTM," sometimes "twelve trailing months") values are generally computed by summing up values from the interim statements over the past 12 months.  TTM data is useful in presenting an "annualized" value for Income Statement or Statement of Cash Flow data that is both up-to-date and without as much of the unpredictable variability as might result from annualizing just the single most recent interim report. 

Occasionally we do not find 12 months of contiguous data in the most recent interim statements, so we must use alternative techniques.  One common reason is because a restated prior period uses an unusual period length.  This can happen, for example, if a company publishes a 3rd quarter result that includes a restatement of prior periods.  In this example, the company will only report 3rd quarter and 9-month results.  We can "back into" the restated first half results but this does not give us a restated 1Q or 2Q.  Thus, a few quarters later, the recent interim statements do not add up to 12 months.

Another common problem arises when there has been a change in either the currency or the accounting standards used in the financial reports during the past 12 months.  For example, starting in 2011 Canadian public companies have been required to report their interim statements (as well as comparative statements for the prior year) using the International Financial Reporting Standards (IFRS).  So, there has been a period of time when the available interim financial statements don't include a full 12 consecutive months using IFRS.

Here are the steps we take when computing a TTM value:

  • If all interim periods are in the same currency and accounting standard, and the sum of the period lengths is approximately 12 months, we use the sum of these values;
  • Otherwise, if the period we are looking at is a fiscal 4th quarter AND the annual statement is in the same currency and accounting standard as the fiscal 4th quarter interim statement, we will use the annual value;
  • Or, if not a 4th quarter, we add up as many recent periods as possible to approximate 12 months (of the same currency and accounting method) and then annualize the value.  Annualizing is done only as a last resort, as it can be subject to seasonal fluctuations.

Who is the CreditRiskMonitor (CRMZ) Payment Score for?

The Payment Score is only for CRMZ subscribers who contribute their Trade A/R data.

All current Trade Contributors have access to the score. If you are not currently a Trade Contributor, speak to your Account Manager to sign up for this free service.

What does the Payment Score mean?

The Payment Score is reported on a scale of "1" to "10", where "1" indicates a high risk of "severely delinquent" payment during the next 12 months, and "10" is a low risk.

It is an "ordinal ranking of risk," meaning that "1" is riskier than "2" and "2" is riskier than "3" (and so on up to "10"). It is not representative of a fixed range or average probability of "severe delinquency." Since its focus is on just one subscriber's Trade portfolio, variability in size and makeup means it is not feasible to arrive at a model that provides an absolute level of risk.

The Payment Score is computed using only the Trade A/R data you provide us as a Trade Contributor. It does not consider any other contributors' Trade experiences, and it does not take any other indicators (such as the FRISK® score or public record data) into account. Therefore, it is based only on your experience with the account, and is optimized to work within your specific experience with each account.

The Payment Score is designed to predict future payment behavior, over the next 12 months. It is therefore quite different in structure from the DBT Index, which is designed to summarize past payment behavior, and which may (depending on the context in which it is displayed on the CRMZ website) include trade experiences from other Trade Contributors.

What is considered "severely delinquent" payment in the definition of the Payment Score, above?

We define "severely delinquent" payment by comparing the amount in the "90 days plus past due" aging bucket with the average total balance over the prior 6 months.

Specifically, an account is "severely delinquent" if this 90+ amount is more than 10% of the average total balance.

Where is the Payment Score shown on the CRMZ website?

The Payment Score is shown on various reports accessed via the "Trade" tab of the horizontal menu bar.

How does trade data impact model performance?

The model is driven by the trade data you provide us on your accounts receivable. The model requires a minimum of three trade experiences on an account to produce a score. An account which has consistently reported trade data over at least the past 12 months will provide a more accurate score.

Which accounts are scored?

All accounts in your portfolio for which CRMZ has at least three recent trade experiences.

How does the Payment Score compare to the FRISK® score?

These are very different scores, although they share the same basic risk scale of 1 - 10. They are both proprietary scores of CreditRiskMonitor, and were both developed using rigorous statistical methods, but are designed for very different purposes.

The Payment Score uses only your Trade A/R data, can be applied to any customer for whom you have 3 or more recent trade experiences, and uses its prediction of "severely delinquent" payment to indicate problems with the willingness to pay or the availability of cash for payment.

The FRISK® score requires financial statement data as input (and is more accurate when stock price volatility can be computed, and a Fitch or Moody's rating is available), and uses the probability of a bankruptcy filing within 12 months to indicate financial stress.

Can I find out more about the Payment Score?

Yes. Look at: The CreditRiskMonitor Payment Score (White Paper February 2012).

Call your Account Manager with any questions, or arrange a conference call to discuss the score in more detail.

Copyright © 2018 by (Ticker: CRMZ®). All rights reserved. Reproduction not allowed without express permission by CreditRiskMonitor. The information published above has been obtained from sources CreditRiskMonitor considers to be reliable. CreditRiskMonitor and its third-party suppliers do not guarantee the accuracy and completeness of the information and specifically do not assume responsibility for not reporting any information omitted or withheld. The FRISK® scores, agency ratings, credit limit recommendations and other scores, analysis and commentary are opinions of CreditRiskMonitor and/or its suppliers, not statements of fact, and should be one of several factors in making credit decisions. No warranties of results to be obtained, merchantability or fitness for a particular purpose are made concerning the CreditRiskMonitor Service. By using this website, you accept the Terms of Use Agreement.
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Sunday, October 21, 2018