When assessing credit risk, which of the following ratios would best measure a firm’ s tolerance for additional debt and a firm’ s operational efficiency Ratio 1: Retained cash flow (CFO-dividends) divided by total debt. Ratio 2: Current assets divided by current liabilities. Ratio 3: Earnings before interest, taxes, depreciation, and amortization divided by revenues. Tolerance for leverage Operational efficiency()①A. Ratio 3 Ratio 1 ②B. Ratio 2 Ratio 3 ③C. Ratio 1 Ratio 3
A. ①
B. ②
C. ③