UNCATEGORIZED
By InsidEntity Editorial Desk · Aug 26, 2026 · 13 min read
Seventeen of the first twenty companies scored under both instruments land in the same governance band. On the Financial Stability Rating, the same twenty spread across all five. That difference is the argument for a second number.
A company can have a strong board and a weakening balance sheet. It can also have healthy financials and governance arrangements that deserve a closer look. Neither is a contradiction. They are answers to different questions.
The Company Risk Rating has always answered a governance question: who is in the room, how they arrived there, and how the board is structured. The Financial Stability Rating answers the financial one: are the numbers the company reports about itself holding up over time?
The first twenty companies scored under both now make the case for running two instruments better than any argument could.
What the first twenty actually show
The most striking finding is how differently the two ratings distribute the same twenty companies.
Seventeen of the twenty are rated Good on governance. Only five are Good or better on financial sustainability.
Read the governance column and it is remarkably flat. Of the twenty companies, seventeen sit in the Good band. One reaches Excellent. Two fall to Caution. The whole sample spans just 1.43 points, from Goldman Sachs at 2.90 to MTN Group at 4.33.
Read the financial column and it is nothing like flat. Two companies reach Benchmark at 5.0. Three fall into Risk. One falls below the numerical scale altogether. Excluding that below-scale result, the scored companies span 3.3 points, from 1.7 to 5.0, and distribute across every numerical band in the framework.
| Rating band | Company Risk Rating | Financial Stability Rating |
|---|---|---|
| Benchmark | 0 | 2 |
| Excellent | 1 | 1 |
| Good | 17 | 5 |
| Caution | 2 | 8 |
| Risk | 0 | 3 |
| Below scale | 0 | 1 |
| Spread | 1.43 points | 3.3 points |
Tongaat Hulett’s FSR fell below the 1.00 minimum required for a numerical rating. “Below scale” indicates a result beneath the numerical FSR range; it is not a missing-data classification.
On this sample, the financial rating produces substantially more separation between companies than the governance rating does.
That is worth sitting with, because it is not a criticism of the CRR. It is a finding about what the CRR measures.
Board composition, director independence, auditor tenure and shareholder concentration are structural features. Among large listed companies operating under broadly similar codes and listing requirements, those structures converge.
This platform found the same thing when examining South Africa’s six largest banks, where board composition had converged so completely that the audit relationship was very nearly the only variable ordering the sector.
Financial condition does not converge in the same way. It spreads because it reflects what a business is doing financially rather than how it is formally organised.
That is the practical case for a second number.
One instrument tells you about a governance structure that most large companies have broadly got right. The other tells you where they differ.
What FSR measures
FSR is built from five indicators, each contributing up to one point toward a five-point score. The first four test a three-year pattern, while the fifth is deliberately a current-year, pass-or-fail test.
| # | Indicator | Threshold | Basis |
|---|---|---|---|
| 1 | Revenue growth | At least 2% growth in each of the past 3 years | Three-year pattern, credited proportionally per year |
| 2 | NPAT margin | At least 5% margin in each of the past 3 years | Three-year pattern, credited proportionally per year |
| 3 | Net asset value | Positive in each of the past 3 years | Three-year pattern, credited proportionally per year |
| 4 | Current ratio | At least 1.5x in each of the past 3 years | Three-year pattern, credited proportionally per year |
| 5 | Cash ratio | Total expenses ÷ total cash, 2x or below | Single-year, pass or fail |
Any company can post one strong year on any of the first four measures. Sustaining growth, profitability, positive net assets and adequate liquidity across three consecutive years is a materially harder bar and a better signal than any single year on its own.
Credit accrues per year. A company clearing the threshold in two of three years earns two-thirds of that indicator’s point, not zero and not the full point. That is why scores can land at 3.7 or 2.3 rather than only in whole numbers.
Cash ratio is built differently on purpose. It is a present-tense check on cash against the current cost base, scored as a single-year pass or fail with no averaging to soften a weak year.
Both ratings use the same five bands: Benchmark at 5, then Excellent, Good, Caution and Risk. What differs is what is being measured.
The first twenty
These are the first twenty companies scored under the FSR methodology, across six markets, presented as the initial sample from the rollout rather than a selected peer group. They are ranked from strongest to weakest financial sustainability score.
| Company | Country | FSR | FSR Band | CRR | CRR Band |
|---|---|---|---|---|---|
| Aristocrat | Australia | 5.0 | Benchmark | 3.71 | Good |
| Northern Star | Australia | 5.0 | Benchmark | 3.59 | Good |
| Scentre Group | Australia | 4.0 | Excellent | 3.63 | Good |
| Royal Bank of Canada | Canada | 3.7 | Good | 3.57 | Good |
| Goldman Sachs | USA | 3.3 | Good | 2.90 | Caution |
| Bank of Communications | China | 3.3 | Good | 3.66 | Good |
| AstraZeneca | United Kingdom | 3.0 | Good | 3.88 | Good |
| Amazon | USA | 3.0 | Good | 3.12 | Good |
| Intel | USA | 2.7 | Caution | 2.93 | Caution |
| BHP Group | Australia | 2.7 | Caution | 3.81 | Good |
| Enbridge | Canada | 2.7 | Caution | 3.40 | Good |
| Exxon Mobil | USA | 2.3 | Caution | 3.58 | Good |
| UnitedHealth | USA | 2.3 | Caution | 3.20 | Good |
| Telstra | Australia | 2.3 | Caution | 3.50 | Good |
| MTN Group | South Africa | 2.0 | Caution | 4.33 | Excellent |
| ICBC | China | 2.0 | Caution | 3.71 | Good |
| Telkom SA | South Africa | 1.7 | Risk | 3.68 | Good |
| BT Group | United Kingdom | 1.7 | Risk | 3.67 | Good |
| Nutrien | Canada | 1.7 | Risk | 3.55 | Good |
| Tongaat Hulett | South Africa | (below scale) | Below scale | 3.24 | Good |
Tongaat Hulett’s FSR fell below the 1.00 minimum required for a numerical rating. The result is therefore shown as Below scale rather than as a numerical score.
Scale is not what the financial rating is measuring. Several of the largest companies in the sample sit in Caution, and three established operators fall into Risk.
Four cases in this first batch show why the two instruments are useful together.
Aristocrat and Northern Star: financial outperformance, governance uneven rather than weak
Both reach FSR’s top band at 5.0, the only two companies in this batch to clear all five indicators.
Their CRRs, 3.71 and 3.59, sit in Good. For Aristocrat, the pillar breakdown explains why the governance score does not rise further. Director Independence and Shareholder Influence both reach Benchmark at 5.0. Director Capacity registers 2.83, Caution, and is the sole drag on the composite.
The board itself shows why.
Philippe Etienne holds the Aristocrat seat alongside a non-executive chairmanship of Quantem and non-executive directorships of Lynas Rare Earths and Cleanaway Waste Management, four board positions in total. This platform’s methodology treats four or more concurrent listed-company positions as a marker of potential overextension, and Etienne’s count sits precisely on that line.
Chairman Neil Chatfield’s own record includes simultaneous chairmanships of Virgin Australia and Seek during periods of his Aristocrat tenure, alongside directorships at Transurban and Recall Holdings.
Set against a five-year run without meaningful refreshment before a new director joined in 2024, the picture is not a weak board. It is a board carrying more parallel commitments than the capacity pillar credits.
The financial score tells a different story: all five FSR indicators cleared their thresholds.
In short: a board with a refreshment gap and directors carrying more concurrent roles than the methodology credits, attached to a company that clears every financial indicator.
The two scores are not in tension. They are reading two different things about the same company.
Goldman Sachs: one pillar explains almost the entire gap
Goldman is the only company in this batch where the CRR falls into Caution, at 2.90, while the FSR sits meaningfully higher at 3.3, Good.
The pillar breakdown behind the CRR shows why. Director Independence reaches Benchmark at 5.0, Director Capacity comes in at 3.58, Good, and Shareholder Influence at approximately 3.0, Good.
Three of four pillars are solid.
The fourth is not a modest markdown.
PricewaterhouseCoopers has audited Goldman Sachs Group’s consolidated accounts since 1922, a relationship now more than a century old and longer than any auditor tenure this platform has recorded. On the tenure ladder this series has applied consistently, that relationship scores at or near nil, and a single pillar at the floor of the scale drags a composite that would otherwise sit materially higher down into Caution.
The financial signal, FSR at 3.3, sits above the governance signal for exactly this reason: the balance sheet has nothing to do with a century-old audit relationship.
The CRR is designed to weight that relationship. The FSR is not.
MTN Group: excellent governance, materially weaker financial sustainability
MTN carries the highest CRR in this batch at 4.33, the only Excellent-band score in the set.
Director Independence and Auditor Independence both score 5.0. Shareholder Influence is approximately 4.5.
Director Capacity is the exception, at 2.8, Caution. Of MTN’s twelve non-executive directors, nine hold more than four concurrent directorships, while two sit on six and seven boards respectively.
The gap is not diffuse. It sits with a specific, countable governance issue.
MTN Group: 4.33 CRR, 2.0 FSR.
That is the widest divergence in this batch between a company’s governance score and its financial sustainability score.
The board-oversight picture and the financial picture are pointing in materially different directions, and neither is wrong.
A board that scores close to ceiling on independence and ownership structure is not thereby a guarantee that revenue growth, margin, liquidity and net asset value are holding up over three years.
At MTN, they are not holding up as strongly as the governance number would suggest on its own.
Telkom SA, BT Group and Nutrien: Good governance, Risk financial sustainability
All three carry Good CRRs, at 3.68, 3.67 and 3.55 respectively. None has a CRR pillar in Caution or worse.
All three fall into FSR’s bottom band, Risk, at 1.7.
A Good CRR indicates that a company’s governance structure meets the relevant thresholds for composition, independence, audit relationship and shareholder influence.
It says nothing about whether the underlying financial indicators are holding up over three consecutive years.
In these three cases, on InsidEntity’s five indicators, they are not.
Two of the three are incumbent telecommunications operators. That makes the clustering worth watching as the sample expands, although three companies are nowhere near enough to establish a sector pattern.
FSR is not equally discriminating across every sector
The first twenty also reveal a limitation that matters before the dataset becomes much larger.
FSR is built on absolute financial thresholds. That gives the instrument consistency, but it can also cause companies with structurally similar business models to cluster even when their underlying financial quality differs substantially.
Retail is the clearest example so far.
Shoprite, Walmart and SPAR have all received FSR scores of 2. The underlying companies are hardly interchangeable. Shoprite has been producing strong operational growth, Walmart remains one of the world’s largest and financially strongest retailers, while SPAR has been dealing with a much more difficult operating and governance picture. Yet the same five absolute indicators produce the same score.
That does not make the FSR wrong. It tells us what the first version of the instrument is capable of distinguishing.
Retailers operate with structurally thin margins and often low current ratios because inventory turns quickly and suppliers finance a meaningful portion of working capital. A 5% NPAT threshold and 1.5x current-ratio threshold can therefore be difficult for an otherwise healthy large retailer to clear.
When strong and weak retailers cluster at the same score, the instrument may be reading sector characteristics as much as company-specific financial strength.
That is a limitation worth naming rather than smoothing over.
As the dataset expands, the question is whether those clusters persist. If they do, that becomes evidence for greater sector sensitivity in a future version of FSR.
Tongaat Hulett, and the boundary of the scale
Tongaat Hulett goes further than the Risk band.
Its FSR falls below the 1.00 minimum required for a numerical rating. The result is therefore shown as Below scale, rather than as a numerical score.
That is a structural boundary, not a rounding artefact.
Its CRR is 3.24, Good, based on governance information the platform records as last updated in February 2026. That predates the company’s June 2026 rescue agreement and its August 2026 disclosure that it could not pay its cane growers on schedule.
This is the clearest illustration in the sample of why the two instruments are separate.
A governance score built from board composition, auditor tenure and shareholder structure has no mechanism to register a deteriorating balance sheet.
On governance structure, Tongaat Hulett rates Good.
On financial condition, it runs out of scale.
Both readings are accurate. They measure different things, and a single blended number would have concealed one of them.
InsidEntity’s full account of the Tongaat Hulett case examines what the Good governance rating does and does not tell a reader.
What the rating does not say
FSR is not a credit rating, an investment recommendation or a prediction of future performance.
It reads what a company reports about itself through its consolidated income statement and balance sheet. It does not independently reconstruct every economic exposure sitting outside those statements, and in this first version it does not look through every joint venture, variable interest entity or unconsolidated project-financing vehicle.
That limitation is explicit in the original methodology. FSR reads the company’s own reported consolidated financial statements and does not, in its first version, look inside those structures.
Nvidia provides a live example of why that limitation matters. The company has disclosed an aggregate payment obligation to a single customer’s data-centre project capped at $105 billion, while separately describing more than $500 billion of third-party capital being assembled through six financial institutions to finance AI infrastructure.
A significant portion of that economic architecture does not appear as consolidated balance-sheet liabilities in the way a simple ratio-based model might imply.
This platform has documented that issue when examining Nvidia and repeats it here.
A ratio-based rating cannot outperform the honesty and completeness of the figures it is given.
That was the conclusion of this platform’s Enron and Evergrande retrospectives, and it applies to FSR without modification.
Addressing that limitation is a development problem for future versions, not a claim this release makes.
The practical takeaway
The most useful signal is often neither number alone, but the distance between them.
A company with Excellent governance and Caution finance deserves a different question from one with Caution governance and Good finance.
A company with Good governance and Risk finance raises a third set of questions again.
That divergence is not a flaw in either rating. It is the information a two-instrument framework exists to expose.
The first twenty companies make that visible.
The Company Risk Rating tells a reader about governance: who is watching, how the board is structured and how its members arrived.
The Financial Stability Rating asks whether the financial indicators a company reports are holding up across three years rather than one.
Together they do not produce a verdict.
They produce a better starting point.
And on the evidence of the first twenty companies, nearly all of the differentiation between companies lives in the financial column rather than the governance one.
That is not a failure of the CRR.
It is a finding about what a governance rating, on its own, is structurally unable to tell you.
Further reading: Introducing the Financial Stability Rating: a second number, next to the governance score, not instead of it
About the InsidEntity Company Risk Rating
The InsidEntity Company Risk Rating (CRR) scores companies on a 1 to 5 scale, weighted 40% Director Independence and 20% each for Director Capacity, Auditor Independence and Shareholder Influence. The same scale applies to individual pillar scores and to the published overall rating, which is the average of the four pillar scores: 1.00 to 1.99 is Risk, 2.00 to 2.99 is Caution, 3.00 to 3.99 is Good, 4.00 to 4.99 is Excellent, and 5.00 is Benchmark. The Financial Stability Rating is a separate instrument measuring financial condition and is not combined with the CRR. Ratings update regularly as corporate changes occur, so the platform is always the current view. Explore ratings for companies across 145 stock exchanges at InsidEntity.
Know your entity. Financial Stability Rating figures are calculated from each company’s reported consolidated financial statements per the methodology set out in InsidEntity’s FSR introduction. Company Risk Ratings reflect governance information as recorded on each company’s InsidEntity profile at the time of writing; ratings update as corporate information changes. This is independent research, not financial advice.