Using the information in the table below, answer calculate the following:   Which company demonstrates the worst leverage ratio? Explain what it depicts.         Which company demonstrates the strongest interest coverage ratio? Explain what it depicts.   Walmart Inc Target Corp

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter12: Differential Analysis And Product Pricing
Section: Chapter Questions
Problem 12.4E
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. Using the information in the table below, answer calculate the following:

 

  1. Which company demonstrates the worst leverage ratio? Explain what it depicts.

 

 

 

 

  1. Which company demonstrates the strongest interest coverage ratio? Explain what it depicts.
  Walmart Inc Target Corp Home Depot Inc/The Lowe's Cos Inc CVS Health Corp
  2020 Q2 2020 Q2 2020 Q2 2020 Q2 2020 Q2
Revenue 518 76.8 110 71.8 226.8
EBI TDA 33.7 7 18.3 6.1 14.2
EBI TDA Margin 6% 9% 17% 8% 6%
           
Net Income 12.8 3.2 11.2 2.5 4.3
Return on Capital 11.1 14.1 39.6 13 4.9
Credit Metrics(x)          
Debt/EBI TDA 2 1.9 1.8 3.4 5.9
EBI TDA/Interest 14 16.2 18.7 16 6.6
FCF Coverage 7.7 14.6 11.1 6.2 6.2
Free Cash Flow to Total Debt 0.3 0.2 0.3 0.2 0.1

 

 

 

 

 

 

 

 

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