Calculating Ratios and Estimating Credit Rating
The following data are from Under Armour’s 2015 10-K report ($ thousands).
|Revenue||$3,984,757||Earnings from continuing operations||$225,907|
|Interest expense||14,517||Capital expenditures (CAPEX)||298,928|
|Tax expense||154,112||Total debt||669,000|
|Amortization expense||13,840||Average assets||2,481,992|
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 you calculate in part a., estimate the credit rating that Moody’s might assign to Under Armour.
Refer to Exhibit 7.6 in the textbook for ratio definitions and credit ratings.
Round answers to one decimal place (percentage ex: 0.2345 = 23.5%)