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Acc 561 Week 5 Key Financial Ratios

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Key Financial Ratios The financial information to be discussed for the three companies are different because the ratio is sourced from MorningStar and the percentage was sourced from Bloomberg. This is probably due to the fact that MorningStar computes the ratio based on twelve trailing months and Bloomberg computes for a different time period. We wanted to source credit metrics from Bloomberg because we focused on it throughout the semester. The Walt Disney Company has interest coverage of 23.2% or a ratio of 28.2. The interest coverage ratio is used to determine how easily a company can pay their interest expenses on outstanding debt. Generally, higher the interest coverage ratio is better because it means that they have enough money to …show more content…

The ratings are considered to be in the investment grade. The 1-year default probability according to Bloomberg is 0.0098%, which is extremely low. In addition, according to Seeking Alpha, “The Walt Disney Company ranks in the safest 3% of its peer group from a credit risk perspective.” For Pfizer, Moody’s S&P and Fitch assigned A1, AA and A+u credit ratings, respectively. According to Bloomberg, the 1-year default probability is 0.0036%, which is also low. Moody’s released that Pfizer is an A1 rating as it “reflects its position as one of the world's largest pharmaceutical companies, strong diversity, high profitability, and strong cash flow.” For Amazon, Moody’s and S&P assigned Baa1 and AA- credit ratings, respectively. Moody’s placed Amazon bonds at the low end of the investment-grade spectrum. Compared to another fast-growing company, Tesla, the rating is eight levels above its B3-rated bonds. In addition to the new rating, Moody’s also released that Amazon’s overall rating outlook changed from stable to positive. Moody's vice president Charlie O'Shea says the Whole Foods deal was a central part of the upgrade decision. He noted, "the change in outlook to positive reflects our view that despite the increase in debt, the Whole Foods acquisition is an immediate credit positive for the company on a variety of fronts.” According to Bloomberg, the 1-year default probability is 0.0111%, which is the highest among the three bonds that we bought but still very

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