R 3 = Ratios, Ratings, & Reference


BRASS Program, ALA Annual Conference
June 26, 1995

Don't Let the Numbers Crunch You

Matt Hannigan
Bus., Sci., & Tech. Serv. Sect.
Indianapolis-Marion Co. Public Lib.

Survey of financial ratio source users.
Survey of insurance source users.
Ratio source comparisons.
Insurance rating comparisons.

Attached are the results of a couple of little surveys we did in the Business, Science & Technology Division of the Indianapolis-Marion County Public Iibrary, in the closing months of 1994. Questions about such scientific criteria as reliability, validity, replicability, and generalizability have been gleefully ignored in the design and analysis of these data.

Matt Hannigan
Reference Librarian

Financial Ratio Users Survey

[57 respondents]
What is your age?
<20 (1) 21-30 (15) 31-40 (24) 41-50 (10) 51+ (7)

Are you..
Male (44) Female (12)

Education? -highest level
High School (1) College (41) Masters (11) PhD (2)

What ratio book(s) did you use?
Robert Morris (49)
D&B Key Business Ratios (27)
Almanac of Business and Financial Ratios (25)
Other? Mfg. USA (2), S&P Survey (1), U.S. Indus. Out (1)

Did you find the info you needed?
Yes (44) No (7)

What industry are you researching?

Sheet metal Weight Loss Bookstores
Insurance (2) Veneer Religious recording
Janitorial (2) Highway Const. Travel Agent (2)
Child care Grain elevators Dentists
Law firm Retailing Engineering firm (2)
Wood production Software Screenprinting
Structural steel Asphalt paving Auto salvage
Fasteners Vending Telecommunications (3)
Hobby shops Advertising Office supplies
Electronics Grocery Clothing mfg.
Construction Limousines Dairy prod.
Plumbing Pharmaceuticals

What are you using the information for? (for example; marketing research, business plan, bank loan, etc.)
Marketing (8) School project (2) Wages (2) Valuation (5) Business plan (21) Acquistion (3)

Are you doing this for your employer?
Yes (24) No (32)

If No, are you self-employed or starting a business?
Self employed (16) Starting a business (9)

What is your occupation?

CPA/Accountant (10) Lawyer (3) Banker
Consultant (3) Analyst (2) Invest. advis. (5)
IRS agent (3) Student (5) Marketing (3)
Business acquis. (3) Distributor Office manager
Health services Hotel exec.

How big is your employer (or your own firm)?

<500k (14) 500k-1m (6) 1m-5m (8) 5m-10m (2) 10m-25m (0) 24m-50m (3) >50M (10)

<10 (21) 11-25 (8) 26-50 (1) 51-100 (1) 101-500 (2) 501+ (13)

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Insurance Company Ratings Users Survey

[41 respondents]
What is your age?
<20 (0) 21-30 (8) 31-40 (8) 41-50 (12) 51+ (13)

Are you..
Male (33) Female (8)

Education? -highest level
High School (3) College (23) Masters (13) PhD (2)

What ratings book(s) did you use?
Standard & Poor's Life/Health (15)
Best's Insurance Reports Life/Health (30)
Standard & Poor's Property/Casualty (3)
Best's Insurance Reports Property/Casualty (10)

Did you find the info you needed?
Yes (39) No (2)

Were you looking for a simple rating, or for more detailed information?
Simple (12) Detailed (28)

Was your use of this information for personal or business reasons?
Personal (12) Business (18) Both (10)

Are you planning on purchasing insurance in the next six months?
Yes (12) No (28)

Did your research influence your decision?
Yes (11) No (21)

How understandable were the sources you used?
Very simple (7) Simple (11) Moderate (21) Difficult (0) Very Difficult (0)

Did you discuss use of the source with the librarian?
Yes (9) No (27)

Where did you hear about insurance ratings services?
Books or magazines (9) Television or radio (0) Learned in school (6) Librarian (6) Colleague/Friend (5) Other (11)

What is your occupation?

Housewife (2) Tax Consultant Insurance Exec (4)
Unemployed (2) Investments (3) Attorney (2)
Insurance Sales (9) Student Engineer
Credit Analysis Accountant (2) Banker (2)
Management Occup. Therapy Market Research
Pastry Chef Printing Financial Planner

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Comparison of Major Industry Norm Sources

DATA SOURCE Members D&B data IRS
SIC Yes Yes Yes (1)
Asset Size Yes No Yes
Net Sales Yes No No
Other -- -- Yes (2)
Median Yes Yes Yes (3)
Quartile Yes Yes No
STATEMENT TYPES Audits, etc (4) Ann. Reps. Tax Retns.
(1) Combined SIC codes into IRS' own categories.
(2) Divided data into corporations with or without income.
(3) Did not explicitly state whether norms were means or medians.
(4) Indicated whether the statements were audits, compilations, etc.

SOURCE: Fuller, Philip & Scheidt, Marsha. "Coping With Inherent Problems Associated With Utilizing Industry Norms". Journal of Business & Finance Librarianship. Vol. 1, Number 4, 1993

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Insurance Rating Sources.

Comparison of rankngs
Rank Level S&P Moody's D&P Weiss Best's
1 AAA Aaa AAA A+ A++
2 AA+ Aa1 AA+ A A+
3 AA Aa2 AA A- A
4 AA- Aa3 AA- B+ A-
5 A+ A1 A+ B B++
6 A A2 A B- B+
7 A- A3 A- C+ B
8 BBB+ Baa1 BBB+ C B-
9 BBB Baa2 BBB C- C++
10 BBB- Baa3 BBB- D+ C+
11 BB+ Ba1 BB+ D C
12 BB Ba2 BB D- C-
13 BB- Ba3 BB- E+ D
14 B+ B1 B+ E
15 B B2 B E-
16 B- B3 B-
17 CCC

(Derived from information published regularly in the Insurance Forum.)

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How to Receive an Individual Insurance Company Rating
(from the rating company)

A. M. Best
First dial 1-908-439-2200 to obtain the insurance company's ID code number, then call 1-900-555-2378. The cost for this service is $2.50 per minute and is added to the caller's telephone bill.

Duff & Phelps
For a free rating of a single company, call 312-629-3833

Moody's (Investor Service)
Ratings for up to three companies may be obtained free by calling 212-553-0377.

Standard & Poor's
Ratings for up to five companies may be obtained free at 212-553-1527.

Weiss Research
Call 800-289-9222 for a rating on an individual company. The cost for a verbal report is $15; a one-page wntten report is $25; and an in-depth report is $45. May be charged to your credit card.

Source: Peaver, Christopher. "A.M. Best's lawsuit against Insurance Forum could make insurance ratings harder to find." Indianapolis Business Journal. Dec. 20, 1993, p12A.

bullet R 3 = Ratios, Ratings, & Reference
BRASS Program, ALA Annual Conference, June 26, 1995

Disclaimer: This publication has been placed on the web for the convenience of BRASS members. Information and links will not be updated. Posted 23 May 1997.