Evaluating Credit Risk of Corporate Bonds

Maria is a portfolio manager at a wealth management firm specializing in fixed income investments. She is currently assessing the credit risk associated with a corporate bond in her portfolio. Credit risk refers to the possibility that a bond issuer will fail to make required payments on its debt obligations. Given the importance of monitoring credit risk, she wants to ensure her understanding of the factors that contribute to credit risk.

Which of the following factors is most critical when evaluating the credit risk of a corporate bond?