A firm with a low rating from the bond-rating agencies would have
A) a low times-interest-earned ratio.
B) a low debt-to-equity ratio.
C) a low quick ratio.
D) a low debt-to-equity ratio and a low quick ratio.
E) a low times-interest-earned ratio and a low quick ratio.

Question

Quizplus · Accepted Answer

A low times-interest-earned ratio means that the firm has a low ability to meet its interest payments, which would lead to a low bond rating. A low quick ratio means that the firm has a low ability to meet its short-term obligations, which would also lead to a low bond rating.

A Firm with a Low Rating from the Bond-Rating Agencies