Page 39 - FINAL CFA SLIDES DECEMBER 2018 DAY 15
P. 39
LOS 55.h: Evaluate the credit quality of a corporate
bond issuer and a bond of that issuer, given key Session Unit 16:
financial ratios of the issuer and the industry., p137
55. Fundamentals of Credit Analysis
Ratings agencies publish benchmark values for financial ratios that are associated with each ratings
classification. Credit analysts can evaluate the potential for upgrades and downgrades based on subject
company ratios relative to these benchmarks.
Example: Credit ratings based on ratios (Part 1): A credit rating agency publishes the following
benchmark ratios for bond issues of multimedia companies in each of the investment grade ratings,
based on 3-year averages over the period 20X1 to 20X3:
tanties
Based on the ratios calculated in the previous example and the industry standards in the table above, what are
the expected issuer credit ratings for Coyote and Saxor?
