An analyst collects the following financial information to assess the credit quality of Company Y and...
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An analyst collects the following financial information to assess the credit quality of Company Y and Company Z, relative to each other and their industry average. Company Z 2 250 000 Company Y 550 000 300 000 40 000 1 000 000 4 000 000 Earnings before interest and tax Funds from operations Interest expense Total debt Total capital Goodwill 500 000 Present value of operating leases 300 000 Net pension liability 0 850 000 160 000 2 500 000 6 500 000 0 200 000 Industry average 1 400 000 600 000 100 000 2 400 000 6 000 000 200 000 200 000 0 Calculate adjusted financial ratios for both companies and the industry, and evaluate the relative creditworthiness of Company Y and Company Z. (4) An analyst collects the following financial information to assess the credit quality of Company Y and Company Z, relative to each other and their industry average. Company Z 2 250 000 Company Y 550 000 300 000 40 000 1 000 000 4 000 000 Earnings before interest and tax Funds from operations Interest expense Total debt Total capital Goodwill 500 000 Present value of operating leases 300 000 Net pension liability 0 850 000 160 000 2 500 000 6 500 000 0 200 000 Industry average 1 400 000 600 000 100 000 2 400 000 6 000 000 200 000 200 000 0 Calculate adjusted financial ratios for both companies and the industry, and evaluate the relative creditworthiness of Company Y and Company Z. (4)
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Answer rating: 100% (QA)
To evaluate the relative creditworthiness of Company Y and Company Z we can calculate and compare key financial ratios These ratios are often used by analysts to assess a companys financial health and ... View the full answer
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
Posted Date:
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