Which of the following is commonly measured to determine a municipality's credit rating?

Financial ratios are commonly used to determine a municipality's credit rating because they provide a quantitative assessment of the municipality's financial health and performance. These ratios help rating agencies evaluate various aspects of the municipality's finances, such as its ability to meet debt obligations, its liquidity, and its overall financial stability.

Key ratios assessed might include the debt-to-revenue ratio, which indicates the level of debt in relation to income; the cash ratio, which measures liquidity; and operating margins, which show how well revenues cover operational expenses. By analyzing these ratios, credit rating agencies can gauge a municipality's fiscal management effectiveness, sustainability of revenues, and potential risks, which are critical factors in establishing a credit rating.

Other options serve important functions as well, but they are not as central to the standard credit rating assessments. Debt coverage analysis might provide insight into the ability of revenues to cover debt payments but lacks the broader context that financial ratios provide. Revenue sources are important to understand the diversity and stability of income but do not quantify the municipality’s financial condition in as comprehensive a manner. A multi-year debt budget is critical for future planning but does not directly reflect current financial stability as effectively as financial ratios do.