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

Bond rating agencies assess a company's financial stability and ability to pay back debt, and a low debt-to-equity ratio (indicating a lower level of leverage) and high quick ratio (indicating strong liquidity) are considered important factors in determining a high bond rating. A low times-interest-earned ratio (indicating a higher level of debt and potential difficulty in meeting interest payments) would have a negative impact on a company's bond rating.

To Earn a High Rating from the Bond Rating Agencies