Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Stryker’s 2018 financial statements. Use the information to answer the requirements ($ millions). Revenue $13,601 Interest expense, gross $181 Depreciation expense
Assigning a Long-Term Debt Rating Using Financial Ratios Refer to the information below from Stryker’s 2018 financial statements. Use the information to answer the requirements ($ millions). Revenue $13,601 Interest expense, gross $181 Depreciation expense
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter13: Financial Statement Analysis
Section: Chapter Questions
Problem 13.8E
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Assigning a Long-Term Debt Rating Using Financial Ratios
Refer to the information below from Stryker’s 2018 financial statements. Use the information to answer the requirements ($ millions).
Revenue | $13,601 | Interest expense, gross | $181 |
Depreciation expense | 306 | Dividends, including to noncontrolling interest | 717 |
Amortization expense | 417 | Cash and cash equivalents | 3,616 |
Operating profit (EBIT) | 2,537 | Marketable securities | 83 |
Total debt | 9,859 | Average assets | 24,713 |
Cash from operating activities | 2,610 | CAPEX | 572 |
Funds from operations | 2,852 |
a. Compute the following 10 Moody’s metrics for Stryker for 2018.
Round all answers (except Revenue) to one decimal place (example for percentage ratios: 0.2345 = 23.5%).
Ratio | |
---|---|
Debt / EBITDA | Answer |
EBITA to interest expense | Answer |
Revenue ($ millions) | Answer |
Retained |
Answer |
EBITA margin | Answer |
Operating margin | Answer |
FFO / Debt | Answer |
(FFO + Interest Expense)/Interest Expense | Answer |
EBITA to average assets | Answer |
CAPEX / Depreciation expense | Answer |
b. Use your computations from part a, along with measures in Exhibit 4.8, to estimate the long‑term debt rating for Stryker.
Based on the above computations, the rating for Stryker's long-term debt would fall in the Answer
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