Table 10-3debt ratings median financial ratios by, Ask an Expert

Economics

TABLE 10-3 Debt Ratings: Median Financial. Ratios by Category

	Median ratios for overall category in January 2011 (excludes financial firms) Earnings before
S&P	interest and		Cash flow from
debt	taxes to net	Pretax interest	operations to	Net debt to net
rating	capital	coverage	total debt	capital
AAA	41.6%	105.4	317%	- 33%
AA	25.9%	14.6	47%	31%
A	23.5%	11.5	57%	22%
BBB	16.1%	5.9	35%	32%
BB	15.4%	3.7	25%	37%
B	9.6%	1.5	14%	58%
CCC	-2.6%	-0.3	>0.1%	87%

Using Table 10-3 from your textbook (above):

(1) Compute the four ratios above for your company and determine which rating is closest for each ratio (the numbers in the table are medians, not floors and ceilings).

(2) "Guess" what the company's overall rating would be based on the four ratios.

(3) Look up the actual debt rating and see how close you were with your "guess."

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91971503

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