CCredit A

Question 1

2013 2014
ST Debt 50 100
LT Debt 20 20

Common Stock 100 50
Retained Earnings 150 150

Interest Expense		10	15
Tax Expense		        10	15
Net Income		        30	40
Depreciation Exp		20	25
CF from WC changes	-10	-20
CF from Capex		-20	-60
Cash on B/S		        85	30

Total Debt

Answer 1

ST Debt (current maturities of Long term debt and capital lessees) 100
LT Debt and Capital Lesses20
=Total Debt 120

Debt means I borrow money and I need to pay interests.
If I don’t pay, they can force me into bankqruptcy

Question 2

Total Equity

Answer 2

Common Stock 50
Retained Earnings 150
Additional Paid in capital
=Total Equity 200

Question 3

Total Capital

Answer 3

Total Debt 120
Total Equity200
=Total Capital 320

Question 4

Average Capital

Answer 4

(last year Capital + this year capital) / 2

Question 5

FFO

Answer 5

Net Income 40
+Depreciation Exp 25
=FFO 65

Question 6

CF Ops

Answer 6

FFO 65
+ CF from changing in WC -20
=CF Ops 45

Question 7

FCF

Answer 7

CF Ops 45
+CF from Capex -60
=FCF -15

Question 8

EBIT

Answer 8

Net Income 40
+Interest Expense 15
+Tax Expense 15
=EBIT 70

Question 9

Debt / (Debt + Equity)

Answer 9

120/320 =37.5% A

Question 10

FCF / Debt

Answer 10

-15/120 = -13% CCC-

Question 11

FFO / Debt

Answer 11

65/120 = 54.17% A+

Question 12

EBIT / Average Capital

Answer 12

70/ 320 = 21.88% AA-

Question 13

EBIT / Interest Expense

Answer 13

70/15 = 4.67 BBB

Question 14

Overall this example

Answer 14

BBB+ ~ A- and since this is volatile industry, and new company, B+~ BB-