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Compute the debt to book capitalization

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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)

Reference no: EM131663412

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