Calculating Ratios and Estimating Credit Rating The following data are from Kellogg’s 10-K report dated December...
Calculating Ratios and Estimating Credit
Rating
The following data are from Kellogg’s 10-K report dated December
29, 2018 ($ millions).
| Revenue | $13,547 |
Earnings from continuing operations |
$1,344 |
| Interest expense | 287 |
Capital expenditures (CAPEX) |
578 |
| Tax expense | 181 |
Total debt |
8,893 |
| Amortization expense | 23 |
Average assets |
17,066 |
| Depreciation expense | 493 |
a. Use the data above to calculate the following ratios:
EBITA/Average assets, EBITA Margin, EBITA/ Interest expense,
Debt/EBITDA, CAPEX/Depreciation Expense. Definitions for these
ratios are in Exhibit 7.4.
b. Refer to Exhibit 7.4 and the ratios you calculated in part a.
Estimate the credit rating that Moody’s might assign to
Kellogg.
Round answers to one decimal place (percentage ex: 0.2345 =
23.5%)
| Ratio | Moody's rating | |
|---|---|---|
| EBITA/Avg. assets | ||
| EBITA margin | ||
| EBITA/Int. expense | ||
| Debt/EBITDA | ||
| CAPEX/Dep. expense |
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Calculating Ratios and Estimating Credit
Rating
The following data are from Kellogg’s 10-K report dated December...
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Please correct all the x
Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Stryker's 2018 financial statements. Use the information to answer the requirements ($ millions). Revenue $13,601 Interest expense, gross $181 Depreciation expense 306 Dividends, including to noncontrolling interest 717 Amortization expense 417 Cash and cash equivalents 3,616 Operating profit (EBIT) 2,537 Marketable securities 83 Total debt 9,859 Average assets 24,713 Cash from operating activities 2,610 CAPEX 572 Funds from operations 2,852 a....
CREDIT RATING:
Assign a hypothetical credit rating using the ratios
above.
(note: credit ratings are: Aaa, Aa, A, Baa, Ba, B, Caa-C)
please show which credit rating it is and explain why you got
that credit rating. Thank you!
RATIOS EBITA/Average Assets Net Income Taxes Interest Expense + Amortization ЕBITA 158,536+23,333+(-27,435)+110,749 0.0656 6.56% - (1,675,614+1,581,603)/2 EBITA Interest Expense Net Income Taxes Interest Expense Amortization ЕBITA 158,536 23,333 + (-27,435) 110,749 -8.90 -27,435 ЕBITA Margin EBITDA Margin = EBITDA / Total...
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Refer to the information below from Nordstrom Inc.’s 2016
financial statements. Use the information to answer the
requirements ($ millions).
1,325 Sales $15,208 Depreciation expense 584 Tax expense 400 Interest expense, gross 177 Earnings from continuing operations (Net income) 736 EBITA Cash 619 Average total assets 9,585 Total debt 2,965 Noncurrent deferred tax liabilities 436 Noncontrolling interest Equity 871 Dividends paid 1,185 Cash from operating activities 2,451 a. Compute the following seven Moody's metrics for Nordstrom. See Appendix 4A for...
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