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Introduction
This report collects into a single document the definitions for the most common financial terms our Corporate Finance analysts use across the global franchise. These are the building blocks for most of Moody's financial analysis outside of specialized areas such as financial institutions and project finance. Moody's has changed its practice of adjusting financial data through the definition of ratios. Our basic ratios no longer contain complicated add backs to the numerators and denominators but are instead simpler constructs based on fully adjusted sets of financial statements. In general, Moody's adjusts financial statements to better reflect, for analytical purposes, the underlying economics of transactions and events and to improve comparability of a company's financial statements with those of its peers. Our corporate finance analysts make standard adjustments that are stated in the following rating methodologies:
Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Part II: Standardized Adjustments to Enable Global Consistency for Issuers Reporting under International Financial Reporting Standards ('IFRS'), published in February, 2006 (#96729) Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Part III: Standardized Adjustments to Enable Global Consistency for Issuers Reporting under Japanese GAAP, published in October, 2006 (#98842)
In addition to the standard adjustments, analysts will often make non-standard adjustments where they consider such adjustments to be appropriate to reflect the unique requirements of their region or sector. For example, analysts may adjust financial statements to reflect estimates or assumptions that they believe are more prudent for credit analysis. Going forward, our analysts may reference this document in their research to provide greater clarity for the reader.
Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Part I: Standardized Adjustments to Enable Global Consistency for US and Canadian GAAP Issuers, published in February, 2006 (#96760)
Guideline Rent Expense Multiples for Use with Moodys Global Standard Adjustment to Capitalize Operating Leases, published in March, 2006 (#96830)