Leverage.
The Debt to Equity and Debt to Capital ratios is forecasted to decrease in the next 3 years. This
indicates that COH is going to reduce it level of debt in financing business capital structure.
Hence, COH capital structure will contain less risk. Futhermore, the Interest EBIT coverage is
forecasted to be 28.02 in the next 3 years. It means COH can cover its interest expense by using
firm earnings. This will be a good signal for investors who want to invest in COH in the future. If
the firm can make positive profit with less risk in its capital structure, it would reduce risk for
investors.
Liquidity.
The Current ratio, Quick ratio and Cash ratio of COH is forecated to decrease in the next 3
years. The Current ratio is still going to be greater than 1. It means COH still can cover it shortterm obligations by its short-term assets. Similarly, the Quick ratio is going to be greater than 1.
Hence, COH can easily meet its short-term obligation with firm most liquid assets. However, the
decrease of Quick ratio could indicate that COH will have a difficult time to collect account
receivables or COH paying its bills (account payable) to quick. In addition, COH is going to
reduce the amount of cash holding in total firm assets (the decrease of Cash ratio). The firm
might use this cash to invest in new invesments or expand its business activities to make more
profits.