Guide to Analysing Companies

Rating agency
An agency engaged in rating the creditworthiness of issuers of
financial instruments (see previous entry).
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RATING AGENCY
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Receivables
Money that is owing to a company but has yet to be received.
This is a figure that is watched closely by auditors, bankers
and stockmarket analysts because it can determine a
company’s financial strength (or otherwise).
Reciprocity
The granting by A of certain privileges to B on condition that B
also grants them to A. Reciprocity is a principle that has been
widely applied in international finance. For example, one
country’s financial regulator will let another’s set up on its turf if
the favour is reciprocated. Countries negotiate reciprocal
treaties under which companies operating in both are taxed
only in the country in which they are based. Attempts to crack
down on money laundering and the illicit movement of
money from drug dealing have increased governments’ desire
to scratch each other’s backs. As always, trust is the key.
Recycling
A specific reference to the role of banks in taking surplus funds
from opec’s oil-producing members in 1973–74 and moving the
money to places where it could be profitably absorbed. In many
cases, this effectively meant that the banks were lending the
money to other countries so that they could buy more oil from
opec.
Red clause
A clause typed in red on a letter of credit permitting an ex-
porter to receive all the amount due on the letter of credit in
advance of the goods being shipped. Red clauses originated in
the Australian wool trade.
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