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Zoom in and it's clear. Thanks! Exhibit 6.5 describes the key financial ratios Standard & Poor's analysts use to assess credit risk and assign credit

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Exhibit 6.5 describes the key financial ratios Standard & Poor's analysts use to assess credit risk and assign credit ratings to industrial companies. The same financial ratios for three firms follow 16.7 3.7 18.7 24.6 19.8 80.2 135.1 8.2 40.6 87.9 0.3 9.9 29.2 32.7 8.1 2.7 12.8 EBITDA interest coverage FFO/Total debt () Free operating cash flow/Total debt () 1.0 Total debt/EBITDA Return on capital (%) Total debt/capital (%) 54.8 30.2 Required: 1. What credit rating would be assigned to Firm 1? 2. What credit rating would be assigned to Firm 2? s 3. Does Firm 3 have more or less credit risk than Firm 2? Credit rating for Firm 1 2. Credit rating for Firm 2 3. Does Firm 3 have more or less credit risk than Firm 2

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