Question
Calculating Ratios and Estimating Credit Rating The following data are from Kellogg's 10-K report dated January 2, 2016 ($ millions). Revenue $13,954 Earnings from continuing
Calculating Ratios and Estimating Credit Rating The following data are from Kellogg's 10-K report dated January 2, 2016 ($ millions).
Revenue | $13,954 | Earnings from continuing operations | $752 |
Interest expense | 266 | Capital expenditures (CAPEX) | 553 |
Tax expense | 258 | Total debt | 7,257 |
Amortization expense | 8 | Average assets | 15,711 |
Depreciation expense | 526 |
a. Use the data above to calculate the following ratios: EBITA/Average assets, EBITA Margin, EBITA/Interest expenses, Debt/EBITDA, CAPEX/Depreciation Expense.
b. Using the ratios calculated in part a., estimate the credit rating that Moody's might assign to Kellogg. Refer to Exhibit 7.6 in the textbook for ratio definitions and credit ratings. Round answers to one decimal place (percentage ex: 0.2345 = 23.5%)
Ratio | Moody's rating | |
---|---|---|
EBITA/Avg. assets | Answer % | AnswerAaaAaABaaBaBCaaCaC
|
EBITA margin | Answer % | AnswerAaaAaABaaBaBCaaCaC
|
EBITA/Int. expense | Answer
| AnswerAaaAaABaaBaBCaaCaC
|
Debt/EBITDA | Answer
| AnswerAaaAaABaaBaBCaaCaC
|
CAPEX/Dep. expense | Answer |
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