On August 20, 2018, S&P lowered its credit rating for Campbell Soup Company to BBB- from BBB
Question:
On August 20, 2018, S&P lowered its credit rating for Campbell Soup Company to BBB- from BBB after the company announced plans to sell its refrigerated foods and overseas businesses and use the proceeds to reduce its debt (Campbell Soup Company has a significant debt load). S&P believes these divestitures will make the company more reliant on its soup and beverage businesses that appear to be in decline. Discuss why credit ratings are important to a company like Campbell Soup Company. Do you agree with S&P's decision? Finally, Campbell Soup Company has some debt with covenants that are based on leverage ratios. What are the potential consequences if the company violates one of these ratios?
Financial Accounting
ISBN: 978-0324645576
10th edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice