To Earn a High Rating from the Bond-Rating Agencies, a Firm

question 37

Multiple Choice

To earn a high rating from the bond-rating agencies, a firm should have

• A) a low times-interest-earned ratio.
• B) a low debt-to-equity ratio.
• C) a high quick ratio.
• D) a low debt-to-equity ratio and a high quick ratio.
• E) a low times-interest-earned ratio and a high quick ratio.

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Definitions:

Account Category

A classification for accounting entries that helps organize financial transaction records, such as assets, liabilities, or expenses.

Income Statement

A financial statement showing a company's revenues, expenses, and profits over a specified period.

Balance Sheet

A summary that encapsulates a business's liabilities, assets, and shareholders' equity at a distinct date.

Worksheet

A paper or electronic document with rows and columns, used for organizing, calculating, and presenting financial information.