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Chartered Financial Analyst Level 2

Chartered Financial Analyst Level 2

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  1. An investor compares a company versus its industry average, using the following data (in $ millions):
MetricCompanyIndustry Average
EBIT990
Equity market value80900
Debt market value45360
Interest expense224

A synthetic credit rating schedule indicates:

Credit Rating ACredit Rating BBB
Interest rate coverage (IC)4 < IC < 5
Debt-to-equity ratio (D/E)30% < D/E < 45%

Based on this schedule, comparing credit ratings for the company and industry averages suggests that the company achieves:

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