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Fundamentals of Corporate Finance, 4/c/e

Fundamentals of Corporate Finance, 4/e

Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University

Working with Financial Statements

Internet Application Questions


1		Ratio analysis is a powerful tool in determining the quality of a firm's liabilities. For example, bond rating agencies employ ratio analysis in combination with other risk assessment tools to sort companies' debt into risk categories. Higher risk debt typically carries higher yields. Go to the Canadian Bond Rating Service and click on Benefits. Why do firms get their debt rated?



2		The Dominion Bond Rating Service employs a different rating scale for short-term and long-term debt. Which ratios do you think are important for rating short-term and long-term debt? Is it possible that a firm gets a high rating for short-term debt and a lower rating for long-term debt?



3		Many Canadian companies now provide on-line links to their financial statements. Try the following link to Shaw Communications. How would you rate Shaw's long-term debt based on the criteria employed by DBRS?

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