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E7-33. Assessing the Effects of Bond Credit Rating Changes Ford Motor Co. reports the following information from the Risk Factors and the Management Discus- sion and Analysis sections of its 2015 10-K report. Credit Ratings Our short-term and long-term debt is rated by four credit rating agencies design nated as nationally recognized statistical rating organizations ("NRSROs") by the U.S. Securities and Exchange Commission: . DBRS Limited ("DBRS"); . Fitch, Inc. ("Fitch"); . Moody's Investors Service, Inc. ("Moody's"); and .Standard & Poor's Ratings Services, a division of McGraw-Hill Companies ("S&P"). In several markets, locally-recognized rating agencies also rate us. A credit rating reflects an assess- ment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity. Rating agencies' ratings of us are based on information provided by us and other sources. Credit ratings are not recommendations to buy, sell, or hold securities, and are subject to revision or withdrawal at any time by the assigning rating agency. Each rating agency may have dif- ferent criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency. The following rating actions were taken by these NRSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015: . On November 23, 2015, S&P affirmed its ratings for Ford and Ford Credit, and revised the outlook to positive from stable. The following chart summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs: Ford Ford Credit NRSROs Issuer Minimum Default/ Long-Term Long-Term Long-Term Corporate/ Senior Outlook/ Senior Short-Term Outlook/ Investment Issuer Rating Unsecured Trend Unsecured Unsecured Trend Grade Rating DBRS . ..... BBB (low) BBB (low) Positive BBB (low) R-3 Positive BBB (low Fitch . . . .. BBB-BBB- Positive BBB- F3 Positive BBB- Moody's. .. . N/ABaa3 Stable Baa3P-3StableBaa3 S&P BBB-BBB- Positive BBB- A-3 Poshive BBB- "S&P assigns FC a long-term senior unsecured credit rating of BBB, a one-notch higher rating than Ford and Ford Credit, with a stable outlook. a. What financial ratios do credit rating companies such as the four NRSROs listed above, use to evalu- ate the relative riskiness of borrowers? b. What economic consequences might there have been for Ford when S&P revised its outlook on the company in November 2015? c. What type of actions can Ford take to improve its credit ratings