Calculating Ratios and Estimating Credit Rating

The following data are from Kellogg's 10-K report dated January 2, 2016 ($ millions).

Revenue	$13,954	Earnings from continuing operations	$752
Interest expense	266	Capital expenditures (CAPEX)	553
Tax expense	258	Total debt	7,257
Amortization expense	8	Average assets	15,711
Depreciation expense	526

a. Use the data above to calculate the following ratios: EBITA/Average assets, EBITA Margin, EBITA/Interest expenses, Debt/EBITDA, CAPEX/Depreciation Expense.

b. Using the ratios calculated in part a., estimate the credit rating that Moody's might assign to Kellogg. 

Round answers to one decimal place (percentage ex: 0.2345 = 23.5%)

	Ratio	Moody's rating
EBITA/Avg. assets
EBITA margin
EBITA/Int. expense
Debt/EBITDA
CAPEX/Dep. expense

Answer rating: 100% (QA)

Earnings from continuing operations 752 Tax expense 258 Intere... View the full answer