. 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 IncTarget CorpHome Depot Inc/TheLowe's Cos IncCVS Health Corp 2020 Q22020 Q22020 Q22020 Q22020 Q2Revenue51876.811071.8226.8EBI TDA33.7718.36.114.2EBI TDA Margin6%9%17%8%6% Net Income12.83.211.22.54.3Return on Capital11.114.139.6134.9Credit Metrics(x) Debt/EBI TDA21.91.83.45.9EBI TDA/Interest1416.218.7166.6FCF Coverage7.714.611.16.26.2Free Cash Flow to Total Debt0.30.20.30.20.1

Interest Coverage Ratio:- This ratio also known as “times interest earned ratio” indicates the…

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

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

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 10P

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Question

. 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	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

Definition Definition Cash that is left over after a company has paid for its operating and capital expenses. Unlike net income or earnings, free cash flow excludes non-cash expenses of the income statement and includes the expenditures on equipment and assets. Free cash flow also helps potential shareholders to evaluate how quickly the company can pay interest and dividends.

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