CFA CFA Level 1 CFA Level 1 Question of the Week – Fixed Income

CFA Level 1 Question of the Week – Fixed Income

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    • Matt_AnalystPrep
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      The two primary categories of ratios used for credit analysis are:

      • A. leverage and coverage ratios.
      • B. operating and financial ratios.
      • C. profitability and liquidity ratios.
    • Matt_AnalystPrep
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      The correct answer is A.

      The two primary categories of ratios used for credit analysis are leverage and coverage ratios.

      A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt (loans) or assesses the ability of a company to meet financial obligations.

      A coverage ratio is a measure of a company’s ability to meet its financial obligations. In broad terms, the higher the coverage ratio, the better the ability of the enterprise to fulfill its obligations to its lenders.

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