The relative ratings analyze a certain aspect of the company but always in relation to the size, country or industry to which that company belongs. They give an idea of the situation of the company, in relation to that accounting/financial or economical aspect, within its country, industry or companies of the same size.
An intuitive way of understanding the utility and use of these relative ratings would be to consider the analogy of a test result within a class. The absolut rating would be equivalent, in this situation, to the grade obtained by each of the students. The relative rating would be equivalent to a measure of the grade of each student in relation to the grades of the rest of the class. Let's look at an example:
The relative ratings can therefore be seen as an indication of the relative position of the company with respect to the corresponding rating in relation to the other companies in the same category (size, industry and/or country).
Suppose that a given company has the following values in relation to the solvency rating:
We see, first of all, that the company is solvent, since the absolute solvency rating has a value of 7. However, that value of 3 in the solvency rating relative to its industry it's an indication that, although solvent (because of the absolute rating value), it is less solvent than the majority of the rest of companies in the same industry. This relative note of 3 gives us an indication that approximately 70% of the companies in its industry present a higher solvency than the company to which the relative rating value belongs.
Gradement calculates relative ratings for seven categories, three main ones and other four as a combination of these three ones: