A Primary Means Used by Credit Rating Agencies to Evaluate

question 29

True/False

A primary means used by credit rating agencies to evaluate a company's ability to pay its debts is to compare total assets to total liabilities.

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Definitions:

Financial Performance Measures

Indicators that gauge a business's economic well-being, focusing on metrics of profitability, liquidity, and solvency.

Cost Control

The practice of managing and reducing business expenses to increase profitability.

Management Accounting

The process of preparing management reports and accounts that provide accurate and timely financial and statistical information necessary for managers to make day-to-day and short-term decisions.

Cost Accounting

A branch of accounting focused on calculating and controlling costs of producing or providing services.