Moody's Investors Service highlighted its expanded method of calculating net losses in auto loan pools, in a report issued last week. The calculation Moody's uses is an expansion on the traditional method of calculating cumulative net losses, and involves calculating a new statistic called cumulative net loss to liquidation, which Moody's claims is an indicator of the standard net loss statistic.

Moody's Senior Vice President Kumar Kanthan, suggested that, while loss-to-liquidation is not the only calculation issuers and investors should be using to evaluate auto-loan pools, it is one of the most powerful. "Add it to your toolkit if you are not already using it," he recommended.

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