QUESTION 13 IncorrectP ncorrect Points out of 3.00P Fag question Determining Cre

Question

QUESTION 13 IncorrectP ncorrect Points out of 3.00P Fag question Determining Credit Rating The chart below shows financial ratios for three companies. Use the data, along with Exhibit 7.6 to determine a bond ratirg for each of the three companies below. EBITA/ Avg. Assets Margin Margin EBITA (FFO Int Expense Exp Debt Debt/ Cap. Operating EBITA Interest Exp)Vint EBITDA Retained Exp/lnt Book FFO/Debt Cash Flow 1.6 38.12% 44.72% 37.64% 33 48.60% 21.73% 21.92% 1.3 39.87% 60.82% 32.79% Cash Flow! CAPEX/ Depreciation Volatility Net Debt Company. 112.80% 16.30% 18.82% 15.0 Company 29.20% 11.40% 13.00% 2.3 Company 313.87% 18.62% 20.76% 22.2 13.4 5.1 20.5 1.3 1.2 1.3 10.1 16.0 6.3 Rating Company Company 1 Company 2 Company 3 Check

Explanation / Answer

Solution:

Company

Rating

Company -1

A

Company -2

Ba

Company -3

Aa

?

Explanation:

Company 1 has ratios that are similar to those for "A." rating companies

Company 2 has ratios that are similar to those for "Ba." rating companies

Company 3 has ratios that are similar to those for "Aa." rating companies

Company

Rating

Company -1

A

Company -2

Ba

Company -3

Aa

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