Question
You are analyzing Duff Beer bonds. Currently Duff has a EBIT interest coverage of 2.1 and carries a rating of AAA. The companys leverage ratio
You are analyzing Duff Beer bonds. Currently Duff has a EBIT interest coverage of 2.1 and carries a rating of AAA. The companys leverage ratio is 0.75 and the quick ratio is 0.60.
Industry guidelines for issues rated AAA are as follows:
- Quick Ratio: 75 to 1.25
- Leverage ratio: 0.45 to 0.80
- EBIT interest coverage: 3.5 times
Is Moe a likely candidate for a downgrade? Explain. What action would most likely increase the quick ratio?
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Finance Plain And Simple
Authors: Sebastian Nokes
1st Edition
0273731297, 978-0273731290
