The importance of credit rating: the case of Hanjin Shipping

Insights 8 September 2016

The Bankruptcy of Hanjin Shipping

The news of the day… we knew it for years.

Today, as we are writing this post, the (news) on the crisis of Hanjin Shipping is travelling around the world. Unfortunately, it is the typical case of a financial crisis that turns into industrial crisis: billions of euro of merchandise that get stuck in ports creating enormous problems for companies that relied on the logistical system offered by the Korean multinational.

Was it possible to predict this crisis?
The answer is, unfortunately: "absolutely yes".

We went right away to check the modeFinance credit rating which was CC. That is to say, extremely negative. Not only that going back in time, we discover that this assessment has been confirmed in the last five years.

But, what are the causes?
We note that the income statement is not the real problem: indeed, the EBIT and EBITDA are even positive. In fact, the negative rating is caused by a very weak Solvency and Liquidity.

The financial analysis would have avoided the crisis?
Not directly. But if the clients of Hanjin Shipping had been able to analyze the weaknesses as we did, they could have taken the right countermeasures.

Evaluating the Credit Rating of millions of companies worldwide is in fact a complex job that requires the study of all business areas.

Discover our Credit Report of Hanjin Shipping.

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