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Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Nordstrom Inc.’s...

Assigning a Long-Term Debt Rating Using Financial Ratios

Refer to the information below from Nordstrom Inc.’s 2016 financial statements. Use the information to answer the requirements ($ millions).

Sales $16,983
Depreciation expense 626
Tax expense 442
Interest expense, gross 219
Earnings from continuing operations (Net income) 896
EBITA 1,611
Cash 661
Average total assets 11,360
Total debt 3,167
Noncurrent deferred tax liabilities 554
Noncontrolling interest 0
Equity 871
Dividends paid 1,185
Cash from operating activities 2,451

a. Compute the following seven Moody’s metrics for Nordstrom. See Appendix 4A for definitions.

Round answers to one decimal place (example for percentage answers: 0.2345 = 23.5%).

Ratio 2016
EBITA to average assets Answer %
Operating margin Answer %
EBITA margin Answer %
EBITA interest coverage Answer
Debt to EBITDA Answer
Debt to book capitalization Answer %
Retained cash flow to net debt Answer %

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ekkarill92 answered 2 years ago
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