Reference no: EM131663412

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

Sales	$15,539
Depreciation expense	591
Tax expense	407
Interest expense, gross	184
Earnings from continuing operations (Net income)	766
EBITA	1,376
Cash	626
Average total assets	9,916
Total debt	3,002
Noncurrent deferred tax liabilities	459
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.

EBITA to average assets

Operating margin

EBITA margin

EBITA interest coverage

Debt to EBITDA

Debt to book capitalization

Retained cash flow to net debt

b. Use your computations from part a, along with measures in Exhibit 4.7, to estimate the long-term debt rating for Nordstrom.

Based on the above computations, the rating for Nordstrom's long-term debt would fall in the (Aaa-Aa / A-Baa / Ba-B / Caa-C)