👉 Downgrading is a process in which an organization's performance levels are reduced to reflect its current operational level. This process can occur when an organization's financial ratios, such as liquidity ratio or return on equity, have decreased significantly over time without any external factors that could explain these changes. For example, if an organization's cash flow ratio has dropped from 1.2 to 0.8 over a period of one year, it may be considered downgraded due to the reduction in its financial performance
