1. Which of the following does Moody’s not consider in deriving the credit rating of a company?
a. Profitability ratios
b. Loan covenants
c. Solvency ratios
d. Collateral
e. None of the above
2. Other things being equal, most managers would prefer to report liabilities as noncurrent rather than current. The logic behind this preference is that the long-term classification permits the company to report:
A. Higher working capital and a higher inventory turnover.
B. Lower working capital and a higher current ratio.
C. Higher working capital and a higher current ratio.
D. Higher working capital and a lower debt to equity ratio.