Credit ratings are not very useful as they are merely a static appraisal of the financial health of an issuer at a specific point of time and are essentially backwards looking”. Discuss this statement with reference to the credit ratings assignment process and traditional credit analysis.

Please help with the below minicase.  Directions: The best way to do this case is to use relevant credit information and calculate some financial ratios: ROA, debt ratio, liquidity ratios, ROE, profit margin, Inventory and Asset turnover. Then look at breakeven point probability, and finally the possibility of a repeat order. What can you say about Miami Spice’s creditworthiness? What is the break-even probability of default? How is it affected by the delay before MS pays its bills? How should George Stamper’s decision be affected by the possibility of repeat orders?   MiniCase: George Stamper a credit analyst with Micro-Encapsulators Corp. (MEC) needs to respond to an urgent email request from the southeast sales office. The local sales manager reported that she had an opportunity to clinch an order from Miami Spice (MS) for 50 encapulators at $10,000 each She added that she was particularly keen to secure this order since MS was likely to have a continuing need for 50 encapulators a…

How does a lower credit rating affect borrowers lenders and financial institution? What are the implications of the downgrade on the health of the financial system?