Business Valuation of Companies Based on International Credit Ratings

Purpose. This study develops a transparent and reproducible approach to integrating international credit ratings into business valuation without treating ratings as direct measures of equity value. Design and methodology. Financial indicators for Microsoft, Oracle, IBM, Salesforce and Adobe for FY2021–FY2025 are compared using official filings. Revenue, operating cash flow, capital expenditure and a free-cash-flow (FCF) proxy inform a five-year discounted cash flow (DCF) model. Credit ratings are translated into analytical credit spreads, the cost of debt and weighted average cost of capital (WACC). Favorable and adverse scenarios adjust credit spreads by 35 basis points. Findings. Stronger credit quality reduces the assumed cost of debt and, other factors held constant, raises modeled enterprise value. However, operating scale, cash-flow generation, growth and capital intensity often exert a greater influence on differences between companies. The results are illustrative model estimates rather than observed market prices. Originality and practical implications. The proposed rating–spread–cost of debt–WACC–DCF framework links credit assessment to valuation assumptions and emphasizes documentation of sources, valuation dates and sensitivity tests. For unrated enterprises in Uzbekistan, a synthetic-rating approach based on financial stability, cash-flow quality, business profile, governance and external risks is proposed. Limitations. The analysis uses a small purposive sample, non-aligned fiscal year-ends, assumed spreads and an FCF proxy rather than fully adjusted unlevered free cash flow to the firm.