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)