Grifols, S. A., is a Spanish pharmaceutical company focusing on the development, manufacturing, and sale of therapeutic products. At the end of 2013, Grifols was rated "BB" by Standard & Poor's and considered to have a stable business risk profile. Requiredb. What type of factors does a credit rating agency consider in rating a company? December 31Grifols, S.A. (€ in thousands)20132012Operating income from continuing operations after tax€ 342,054€ 255,377Operating profits before interest inoome, interest expense, and income taxes738,120660,084Depreciation and amortization128,469129,126Deferred income tax expense14,99297018Asset impairment losses (gains)271(1,442)Major non-cash charges (gains)14,873(1,774)Short-term debt248,705189,335Long-term debt2,437,9762,585,988Equity2,107,2041,880,741

A credit rating is a quantified assessment of the creditworthiness of the company.A credit rating affects the chances of approval for the given loan and favourable terms of loan. A high credit rating of an entity indicates strong possibility of paying the back loan in its entirety and on time whereas low credit rating of an entity suggests that an entity had trouble in paying back the loans in past and it might follow the same pattern in future. The factors that a credit rating agency consider in rating a company are as follows:- 1. It considers entity's past records relating to borrowings and paying off debts.If the entity paid the debts on time and in its entirety in past then there is a chances of higher credit rating. 2.It also looks on the entity's future economic potential.If entity's future economic potential looks profitable( based on current performance and projections) then there is a chances of positive credit rating.