Synthetic Rating & Cost of Debt
  • Synthetic Rating & Cost of Debt
  • Synthetic Rating & Cost of Debt
Originally published: 20/06/2016 14:00
Publication number: ELQ-43978-1
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Synthetic Rating & Cost of Debt

Allows you to estimate a rating and a cost of debt for your company from the firm's interest coverage ratio

Inputs needed:
- type of firm
- operating lease or rental commitments
- current earnings before interest and taxes (EBIT)
- current interest expenses
- current long term government bond rate

Note: this model is being shared with the authorization of Professor Aswath Damodaran from NYU Stern Business School (

This Best Practice includes
1 Excel Model File

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Further information

The objective of this model is to get the following output values:
- interest coverage ratio
- estimated bond rating
- estimated default spread
- estimated cost of debt



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