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Company 1 Company 2 Company 3 EBIT interest coverage 16.7 2.7 12.8 EBITDA interest coverage 24.6 3.7 18.7 FFO/ Total debt 135.1 19.8 80.2 Free


Company 1 Company 2 Company 3
EBIT interest coverage 16.7 2.7 12.8
EBITDA interest coverage 24.6 3.7 18.7
FFO/ Total debt 135.1 19.8 80.2
Free operating cash flow/Total debt 87.9 8.2 40.6
Total debt/EBITDA 0.3 4.0 1.0
Return on capital 32.7 9.9 29.2
Total debt/Capital 8.1 54.8 30.2

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  1. What credit rating would be assigned to company 1? 
  2. What credit rating would be assigned to company 2? 
  3. Does company 3 have a greater or lower credit risk than company 2? How can you know?

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