To earn a high rating from the bond rating agencies,a company would want to have _________.
I.a low times interest earned ratio
II.a low debt to equity ratio
III.a high quick ratio

Question

Quizplus · Accepted Answer

A company would want to have a low debt to equity ratio as it shows a lower level of debt in relation to the shareholder's equity. This indicates that the company is not highly leveraged, and it will be easier for them to pay off their debts. A high quick ratio also helps as it shows that the company has enough quick assets to pay for their current liabilities. However, a low times interest earned ratio indicates that the company is not generating enough revenue to cover their interest expense, which could negatively affect their creditworthiness. Therefore, only options II and III are correct.

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