Question
Which of the following is one of the alternatives company co-managers should consider in trying to improve their company's credit rating, especially if the company
Which of the following is one of the alternatives company co-managers should consider in trying to improve their company's credit rating, especially if the company has a B- or C credit rating? (The financial measures used in determining company credit ratings are discussed in the Help document associated with page 5 of the Camera & Drone Journal.)
Withdrawing cash from the company's retained earnings account on the balance sheet and using it to accelerate the paying off the remaining principal on 5-year and 10-year bank loans--this will reduce interest costs and help boost the company's current ratio
Repurchasing shares of the company's common stock; this improve the company's debt-equity percentages
Using a portion on the company's internal cash flows and new issues of common stock to pay higher dividends to shareholders
Temporarily reducing annual camera and drone output at the assembly facilities to save on assembly expenses and using the cash saved to repurchase shares of stock in the upcoming years--fewer shares of stock outstanding will conserve on the cash needed to pay dividends, thereby helping to boost the company's credit rating
Issuing additional shares of stock and using the proceeds to accelerate paying the remaining principal on any 5-year and 10-year loans--this will lower the company's interest costs, which, in turn, will help improve its interest coverage ratio and its debt-equity ratio
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started