How does lowes z score compare to home depots z score

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How does Lowe's Z-score compare to Home Depot's Z-score computed in the module? Which company has a higher bankruptcy risk? Explain. The solution is on page 4-46. ODULE-END REVIEW efer to the income statement and balance sheet of Lowe's Companies, Inc., from Mid-Module eview 1 and 2 earlier in this module. PEN DIX 4: Credit Risk Analysis at Two Major NRSROs rd & Poor's Credit Risk Analysis Standard & Poor's (S&P) considers the following in its credit risk _ .- of companies. 3usiness risk Financial characteristics Financial policy Profitability Capital structure Cash flow protection Financial flexibility provides long-term and short-term issuer credit ratings (in addition to ratings on specific bond issues, called ratings). S&P classifies its long-term issuer ratings from AAA through CC. This yields eight distinct ratings; their - gs follow: Industry characteristics Competitive position (marketing, technology, eificiency, regulation) _lanagement Financial risk :\ extremely strong capacity to meet financial commitments. very strong capacity to meet financial commitments; differs from AAA only to a small degree. strong capacity to meet financial commitments but somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions. B adequate capacity to meet financial commitments; adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet financial commitments. less vulnerable in the near term than other lower-rated entities; it faces major ongoing uncertainties and exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet financial commitments. more vulnerable than BB, but currently has the capacity to meet financial commitments; adverse business, financial, or economic conditions will likely impair the capacity or willingness to meet financial commitments.
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CCC 4-31 Module 4 I Credit Risk Analysis and Interpretation CC currently vulnerable and is dependent upon favorable business, financial, and economic conditions to meet financial commitments. currently highly vulnerable. Then, for ratings AA through CCC, S&P can modify the rating by adding a plus (+) or minus (-) sign to show relative standing within those ratings. This creates 20 distinct ratings for companies that issue long-term debt. S&P classifies its short-term issue ratings from A-I through C. This yields five distinct ratings; their meanings follow: A-I strong capacity to meet financial commitments; within this category, S&P can add a plus sign (+) to indicate that the capacity to meet financial commitments is extremely strong. A-2 satisfactory capacity to meet financial commitments but somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions.
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