A credit analyst is assessing the efficiency and leverage of two aerospace companies on the basis of

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A credit analyst is assessing the efficiency and leverage of two aerospace companies on the basis of certain sub-factors identified by Moody’s. The analyst collects the information from the companies’ annual reports and calculates the following ratios:

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Based solely on the data given, which company is more likely to be assigned a higher credit rating, and why?

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International Financial Statement Analysis CFA Institute Investment Series

ISBN: 9780470287668

1st Edition

Authors: Thomas R. Robinson, Hennie Van Greuning CFA, Elaine Henry, Michael A. Broihahn, Sir David Tweedie

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Question Posted: Feb 14, 2024 09:01 AM

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A credit analyst is assessing the efficiency and leverage of two aerospace companies on the basis of

Question:

EBITDA/Average assets Debt/EBITDA Retained cash flow to debt Free cash flow to net debt Bombardier Inc. 7.5% 3.9 6.1% -7.0% BAE Systems plc 10.1% 3.1 13.7% 7.7%

Step by Step Answer:

The ratio comparisons are all in favor of BAE Systems plc BAE has a ...View the full answer

International Financial Statement Analysis CFA Institute Investment Series

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