Which of the following will tend to improve a bond's rating?
I. An improvement in the firm's cash flow.
II. An increase in corporate debt.
III. An increase in net profits.
IV. An increase in net working capital.

Question

Which of the following will tend to improve a bond's rating?
I.	An improvement in the firm's cash flow.
II.	An increase in corporate debt.
III.	An increase in net profits.
IV.	An increase in net working capital.

Quizplus · Accepted Answer

An improvement in cash flow, an increase in net profits, and an increase in net working capital all indicate better financial health, which can lead to an improved bond rating. An increase in corporate debt, however, could negatively impact the bond rating.

Which of the Following Will Tend to Improve a Bond's