Which of the following factors is least likely part of the analysis of an issuer’s character?
A)
Executive compensation and benefits structure.
B)
Conservatism.
C)
Succession planning.
Executive compensation structure is not part of the credit analysis. Credit agencies generally try to assess management quality by understanding business strategies and policies created by management.
Which of the following is most likely to affect the analysis of a firm's ability to repay the interest and principal components of its debt?
A)
The level of the company's debt to total assets ratio.
B)
The character of the firm's management.
C)
The firm's ability to generate operating cash flows.
Although we would look at the company's debt-to-total assets ratio in determining the company's ability to repay its debt, the operating cash flows tend to be more critical to the analysis.
Which of the following statements regarding the analysis of an issuer’s capacity to pay is least accurate?
A)
An analyst should examine the firm's financial position over the past three to five years to help determine capacity to pay.
B)
A "material adverse change clause" would weaken a back-up facility.
C)
A noncontractual line of credit is viewed as a strong back-up facility.
A strong back-up facility exists when a lender is contractually obligated to provide back-up financing. If the agreement is noncontractual then the back-up facility is considered weak.
发表于 2011-3-22 15:43
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use to analyze credit quality EXCEPT: