Final answer:
A firm with a low rating from bond rating agencies is likely to have poor financial health indicators such as a low times interest earned ratio, a low quick ratio, and possibly a high debt to equity ratio. These reflect a higher risk of default, influenced by the firm's profitability, payment history, and changing market interest rates.
Step-by-step explanation:
The subject in question relates to how a firm's financial health is interpreted through various ratios and how bond rating agencies may rate a firm's bonds based on those financial indicators. A firm with a low rating from bond rating agencies typifies a higher risk of default, which may be reflected in several financial ratios.
A low rating could indicate a low times interest earned ratio, implying the firm has less income available to cover interest expenses. A low quick ratio suggests the firm may not have enough liquid assets to meet short-term liabilities, further indicating risk. Additionally, the firm might have a high debt to equity ratio, indicating a relatively higher level of debt financing compared to equity, which increases financial leverage and risk. Therefore, the correct answers in the context given could be a), b), and g).
By drawing parallels with the provided information, we can infer that bond ratings are directly impacted by the borrower's ability to repay the loan, with higher profits leading to a higher rating and thus, a higher capability to repay. Conversely, if a borrower has a history of late payments or if market interest rates have risen, the loan and associated bonds appear less attractive to investors, leading to a lower rating and a perception of increased risk.