Question

The company is Nordstrom.

Track Record: Use this section to persuade the lender that you are credit-worthy. You must:

A. Convincingly argue that your organization is on solid financial footing, and thus at a low risk for default, supporting your argument with appropriate

financial statements, ratios, and other indicators of financial performance and health.

B. Convincingly argue for your organization’s trustworthiness, providing credible evidence of legal and ethical financial behavior. For example, this

might include recent audit results; credit history; absence of significant lawsuits, recalls, or regulatory judgments; or other evidence designed to show that the company holds itself to the highest legal and ethical standards.

Answer 1

ANSWER-

Nordstrom is a strong organization which provides with good quality of daily use products viz., apparels, footwear etc. Besides all this, it is financially as well as legally strong on the following grounds mentioned below (along with evidences) -

(A) FINANCIAL FACTORS-

(i) Debt-Equity Ratio- As this ratio tells about the leverage or company's capital structure, debt portion plays a very vital role because it is tax deductible. Nordstrom's 'Debt-Equity' Ratio is, on an average, equivalent to 3, over a period of few years which shows that debt portion has not been increased and thereby the company is not increasing it's financial risk and is stable over a period of few years.

(ii) Current Ratio- This ratio tells about the solvency and liquidity status of the company as it considers the proportion of current assets and current liabilities. Since the current ratio of Nordstrom has been on an average equivalent to 1, over a period of few years, the liquidity and solvency are not much affected by the dynamic factors in the environment, are not volatile and thus are stable.

(iii) Net Profit Margin- The net profit margin shows the profitability of a firm after all the expenses and taxes. This ratio of Nordstrom has been on increasing trend which shows the increase in surplus funds available with the company.

(iv) Asset Turnover- This ratio defines the capability of assets to generate revenues for the company. Since the ratio has been on increasing trend over a period of few years, this proves to be positive indicator of increasing revenues of the firm.

(v) Receivable Turnover- This ratio shows the number of days taken to encash the accrued income from debtors. Since it has been on declining trend, the firm takes less time to convert debtors into cash and cash equivalents which is a positive sign in terms of liquidity and solvency of the firm.

(vi) Return on Investment- This ratio tells about the income or returns generated on investments made by firm. It also has been on increasing trend which is a positive indicator in terms of profitability, revenues and liquidity of the firm.

(vii) Return on Investment- Average Stock Price shows the brand value of a company in the market. The same has been on rising trend rather than declining which shows the trust amongst the people for the brand value of a company.

* The company is also planning to expand it's business in order to fetch more profits and market presence in future.

* "Net Interest Expense decreased as a result of decrease in interest rates and long term debt outstanding, partially offset by an increase in short-term debt outstanding" [as per the 'Transition Report' pursuant to sec 13 or 15 (d) of The Securities Exchange Act of 1934 (Part 2- Item 6)]

Summary of the financial indicators is provided below-

FINANCIAL RATIOS(INDICATORS) 2018-19 2017-18 2016-17 2015-16 Debt/Equity Ratio 2.075 2.81 3.1885 3.22 Current Ratio 1.01 0.99 1.065 1.07 Net Profit Margin 3.55 2.82 2.39 13.31 Asset Turnover 1.7 1.9 1.87 1.86 Receivable Turnover 107 106 105 Return on Investment 15.88 11.949 .74 12.94 Average Stock Price 41 37 4440 2014-15 2.21 1.03 3.25 1.46 103 12 39 103

(B) EVIDENCE OF HIGHEST LEGAL AND ETHICAL STANDARDS-

The company has highest legal and ethical standards and the can be justified by the following evidences mentioned below-

(i) No Legal Proceedings- No Legal Proceedings have been initiated against the company so far as per the 'Transition Report' pursuant to sec 13 or 15 (d) of The Securities Exchange Act of 1934 (Part 1- Item 3)

(ii) Regularity in Audits- "Audit fees primarily include services for verifying the financial statements along with reviews of our interim financial information and Forms 10-K and 10-Q. Deloitte's work on this audit was performed by full time, permanent employees and partners of Deloitte" as per the 'Transition Report' pursuant to sec 13 or 15 (d) of The Securities Exchange Act of 1934 (Part 3- Item 14)

So, company is financially strong as well as holds legal and ethical standards which are the major factors of being credit worthy.