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Accurate, Authentic and Rational Credit Rating for Myer

Essay by   •  March 1, 2016  •  Creative Writing  •  661 Words (3 Pages)  •  470 Views

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Introduction:

This report aims to investigate an accurate, authentic and rational Credit Rating for MYER, which is one of the greatest retailing firms operating in Australia.

Credit rating can be described as an assessment of a business entity to evaluate its credit worthiness, the business entity under consideration in this report is Myer. Credit ratings provide benefits to the Company as well as its investors. On the part of the company the credit ratings improve its corporate image thereby giving assurance to its   investors by providing safety of investment and minimizing the risk of bankruptcy. On the other hand these ratings can be a useful tool for the potential investors for making their allocation decisions.

In order to calculate the credit rating of Myer, we have examined its 4C’s and used the Traditional Credit Analysis Approach. In addition to this, we have also utilized all the publicly accessible data we could gather. The following mentioned techniques have been used to determine the Credit Risk:

  • Traditional Credit Analysis
  • Credit scoring Models
  • Credit Risk Models

Industry Overview

The Australian retail industry has four major players which are Wesfarmers, Woolworths, David Jones and Myer. The market shares of these companies are listed below:

  1.  Wesfarmers 41.8%  
  2. Woolworths 23.8 %
  3.  Myer 16.6%  
  4. David Jones 9.6 %  

As a result of the Global Financial Crisis the Australian retail industry has confronted problems to maintain its business. This has also led a strong influence on Consumer Buying Behavior, now they have become more conscious about their spending and consumption. Today’s Consumers are being termed as “Savvier Buyers or Careful spenders”. Figures suggest that the current trend will prevail through the year 2014 due to increased unemployment rate and challenges faced by the Australian industry as a whole. Besides, this industry has also entered in the phase of Maturity .The industry will grow at a slower pace as this sector is now soaked and reached its maturity. In 2013-14 the industry generated an income of $18.7Bn with a profit of $1.1Bn.In the recent five year from 2009-14 the industry growth was estimated to be negative 1.8 %, however it is relied upon to have a development of 0.4% in the impending five years from 2014-19.This future development would be induced by new market entrants and major players are expected to use the future economic boost.However , it is also expected that the local businesses  will be contronting enormous rivalry from universal online stores and a few major international chains like H & M, Uniqlo and forever21 which have already intervened the market.The revenue is forcasted to grow 0,4% yearly to achieve its target  income of $19.1Bn in year 2018-19.

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