Exhibit 7.6 Ratio Values for Different Credit Ratings* (FFO + Int Exp)/Int Exp FFO/ Debt RCF/Net Debt 0.9 1.3 EBITA) EBITA EBITA/ Oper Avg AT Margin Int Exp Margin Aaa ........ 16.0% 22.8% 35.7 19.0% Aa ......... 14.3% 21.4% 21.1 19.2% A......... 13.6% 19.4% 13.4 16.8% Baa ......... 10.3% 15.1% 7.2 14.0% Ba................ 8.6% 12.2% 3.8 10.9% B........... 6.7% 9.7% 8.1% Caa-C...... 5.6% 5.9% 0.8 5.4% 36.0 21.1 13.8 8.4 5.3 3.1 86.3% 62.7% 46.1% 31.0% 22.4% 13.6% 3.4% 81.5% 33.8% 38.8% 28.1% 22.6% 13.3% 3.4% Debt/ Debt/ CAPEX/ Rev EBITDA Book Cap Dep Exp Vol 23.7% 1.6 8.6 41.1% 1.3 6.5 1.6 39.3% 1.3 10.4 2,5 45.8% 1.2 11.0 3.4 50.1% 67.3% 1.1 17.4 7.7 99.1% 0.9 11.7 1.2 15.4G0 1.7 51 1.4 Calculating Ratios and Estimating Credit Rating The following data are from Kellogg's 10-K report dated January 2, 2016 ($ millions). Revenue Interest expense Tax expense Amortization expense Depreciation expense $13,954 Earnings from continuing operations $752 266 Capital expenditures (CAPEX) 553 258 Total debt 7,257 8 Average assets 15,711 526 Support 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 EBITA margin EBITA/Int. expense Debt/EBITDA CAPEX/Dep. expense