the articles, ?Corporate Bond Analysis: What to Consider (AAII)?and ?S&P Corporate Ratings Criteria.? The links to these reports can be found in the F303 Bonds II Module of Oncourse. Focus on the Four C?s of Credit as described in the AAII article and the financial ratios for various bond ratings as describe in Table 1?Key Industrial Financial Ratios, Long-Term Debt of the S&P report then write a five (5)-page report (to include tables) in which you COMPARE and CONTRAST the financial risk of the Johnson & Johnson ?AAA? rated bond and the Boeing Co. ?A? rated bond shown below. These two bonds can be found using the Search box in the bond section of FINRA. FINRA Bond Market Data www.finra.org/marketdata(Links to an external site.) Click on ?Bonds? on the left-hand side. Click on ?Corporate? circle. Click on ?Bonds? circle. Type Johnson (my screen hangs up on Johnson & Johnson) or Boeing Co in ?Issuer Name? box.

FINRA is an independent regulator for the securities industry. In the bonds section of the Market Data Center, you can get general bond market information, as well as price information with intraday transaction prices (delayed 15 minutes) for corporate bonds, municipal bonds, U.S. Treasury and government agency bonds. Pricing information includes execution date and time, quantity, price, yield and several years of trade history, where applicable; basic description information and credit ratings are also indicated. A bond screen lets you search by issuer name, CUSIP, type, maturity, yield, coupon type, trade activity and other criteria. A watchlist allows you to track up to 100 issues at a time. Educational material on bonds, bond investing and bond trading is also provided. This is a typical CFA Level 2 Exam type of question. Use at least the past 3 years of annual Consolidated Financial Statements for each firm in your analysis (i.e. consider the average and trend in the important financial ratios and not just the most current). Financial statement data can be found on web sites such as Yahoo Finance, Google Finance and MSN.Money. You can also go directly to the firm?s web site where Annual Reports can generally be found.

The question is not intended to be difficult. Covenant information is difficult to find unless you subscribe to a bond rating service. As such, focus your analysis on Capacity (financial ratios), Collateral (assets of the firm) and Character (subjective analysis of the way management runs the firm).

Issue Coup(%) Mat Rat Call

Johnson & Johnson 4.500 09/01/2040 AAA Yes

BoeingCo 5.875 02/15/2040 A Yes

Attached is the Financial ratios I created.

Key Industrial Financial Ratios, Long-Term Debt Three-year (2013-2015) medians JNJ Boeing Co AAA A EBIT interest coverage (x) 30.47 5.07 EBITDA interest coverage (x) 37.48 6.20 FFO/total debt (%) 98.30 78.90 Free operating cash flow/total debt (%) 99.48 65.76 Total debt/EBITDA (x) 1.23 1.09 Return on Capital (%) 17.71 17.02 Total debt/(total debt + eqiuty) (%) 44.22 48.97