Debtshort tenm debt long term debt deferred taxes

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Debt)/(Short-Tenm Debt + Long-Term Debt + Deferred Taxes + Minority Interest + Book Equi¥ Capital Expenditures/Depreciation Expense where: EBITA = Earnings from continuing operations before interest. taxes, and amortization EBITOA = Earnings from continuing operations before interest and taxes, depreciation, and amortization FFO = Net income from continuing operations plus depreciation, amortization, deferred income taxes, and other noncash items
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Module 7 I Liability Recognition and Nonowner Financing 7-24 - w of these ratios indicates that Moody's considers the following factors, grouped by area hasis, as relevant in evaluating a company's ability to meet its debt service requirements: fitability ratios (first four metrics in footnote to Exhibit 7.6) -r- h flow ratios (metrics five, six and seven in footnote to Exhibit 7.6) lvency ratios (last three metrics in footnote to Exhibit 7.6) , these ratios are variants of many of the ratios we describe in Module 3 and elsewhere in k. Other relevant debt-rating factors include the following: ollateral Companies can provide security for debt by pledging certain assets against the nd. This is like mortgages on assets. To the extent debt is secured, the debt holder is in a ferred position vis-a-vis other creditors. Covenants Debt agreements (indentures) can restrict the behavior of the issuing company so to protect debt holders. For example, covenants commonly prohibit excessive dividend pay- !::lent,mergers and acquisitions, further borrowing, and commonly prescribe minimum levels for y liquidity and solvency ratios. These covenants provide debt holders an element of control 'er the issuer's operations because, unlike equity investors, debt holders have no voting rights. tions Options are sometimes written into debt contracts. Examples are options to con- -ertdebt into stock (so that debt holders have a stake in value creation) and options allowing e issuing company to repurchase its debt before maturity (usually at a premium). ~SEARCH INSIGHT Valuation of Debt Options t instruments can include features such as conversion options, under which the debt can be verted to common stock. Such conversion features are not accounted for separately under P. Instead, convertible debt is accounted for just like debt with no conversion features (unless conversion option can be separately traded). However, option-pricing models can be used to irnate the value of such debt features even when no market for those features exists. Empirical ~Its suggest that those debt features represent a substantial part of debt value. These findings tribute to the current debate regarding the separation of compound financial instruments into ::- t and equity portions for financial statement presentation and analysis. Trends with Credit Ratings?
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