Question
Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Nordstrom Inc.s 2016 financial statements. Use the information to answer the
Assigning a Long-Term Debt Rating Using Financial Ratios
Refer to the information below from Nordstrom Inc.s 2016 financial statements. Use the information to answer the requirements ($ millions).
| Sales | $14,095 | ||||
| Depreciation expense | 560 | ||||
| Tax expense | 376 | ||||
| Interest expense, gross | 153 | ||||
| Earnings from continuing operations (Net income) | 600 | ||||
| EBITA | 1,117 | ||||
| Cash | 595 | ||||
| Average total assets | 8,472 | ||||
| Total debt | 2,805 | ||||
| Noncurrent deferred tax liabilities | 324 | ||||
| Noncontrolling interest | 0 | ||||
| Equity | 871 | ||||
| Dividends paid | 1,185 | ||||
| Cash from operating activities | 2,451 |
a. Compute the following seven Moodys metrics for Nordstrom. See Appendix 4A for definitions.
Round answers to one decimal place (example for percentage answers: 0.2345 = 23.5%).
| Ratio | 2016 | ||
|---|---|---|---|
| EBITA to average assets | % | ||
| Operating margin | % | ||
| EBITA margin | % | ||
| EBITA interest coverage |
| ||
| Debt to EBITDA |
| ||
| Debt to book capitalization | % | ||
| Retained cash flow to net debt | % |
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
