Some of Goldberg Corp.\'s ratios are given below: [Earnings from continuing oper

Question

Some of Goldberg Corp.'s ratios are given below:

[Earnings from continuing operations before interest and taxes] / [Gross interest incurred before subtracting (1) capitalized interest and (2)      interest income] : 4.1000

[Long-term debt plus current maturities, commercial paper, and other short-term borrowings] / [Long-term debt plus current maturities, commercial paper, and other short-term borrowings + shareholders’ equity (including preferred stock) plus minority interest] : 47.0200

What rating would you expect from Standard & Poor’s rating for Goldberg Corp.'s bonds?

BBB

B

CCC

AAA

BBB

B

CCC

AAA

Explanation / Answer

Interest coverage Ratio = 4.1000

Based on Int Cov ratio , Rating should be BBB

Debt to capital Ratio = 0.4702

As per S&P rankings to above Debt to capital ratio, Rating should be BBB

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