The geographic rating tries to capture the so-called country risk. All other Gradement ratings for a particular company capture features relating to that company. For example, profitability, solvency, dividends, growth. All are ratings calculated from internal data of the company.
The geographical rating is different from the rest in the sense that it is calculated based on elements external to the company. This rating is calculated based on factors associated with the country in which the company has its registered office. It is important to consider these factors because the country or geographical area in which the company operates is of paramount importance in the future evolution of the business and will therefore also have an important influence on the other ratings associated with the company.
The geographic rating attempts to capture the country risk in a value that will range from 0 to 10. The value of this rating is not included in the Gradement rating calculation so you will have to consider it when considering an investment in a particular country. The following table can serve as a reference for assessing the risk of a particular country based on this rating:
|Rating value range||Country risk level|
|0.0 - 5.0||Extensive Risk|
|5.0 - 6.5||Tolerable Risk|
|6.5 - 7.5||Slight Risk|
|7.5 - 10||No Risk|
The so-called country risk , which captures this geographic rating, includes, among others, the following types of risks:
The geographic rating attempts to capture all the risks described above. Its calculation is based on the Economic Freedom Index published by The Heritage Foundation. This index is a perfect proxy for country risk. The index is calculated based on ten quantitative and qualitative factors grouped into four main categories: