Financial analyst

You work as a financial analyst at a large automobile corporation that occasionally makes acquisitions of smaller companies that specialize in the production and assembly of small component parts. In order to achieve vertical integration of its newest sports sedan model, the company is evaluating a few manufacturing companies that have experienced strong financial performance in the past few years. These companies would make excellent acquisitions due to the nature and quality of the product and the anticipated ease of transition. You have been tasked to evaluate these companies from a financial perspective and choose one. To do this, you need to brush up on a few concepts by addressing the following topics:
● Describe what a crediting rate/score is. Should this be a factor in evaluating companies?
● The firm will need to raise funds immediately for the acquisition, and debt will be used. Should the firm borrow on a long-term or short-term basis? Why?
● Explain the effect, if any, inflation rates will have on the purchase? How significant is this factor?
● Define the relationship between yield curves and the term structure of interest rates.
● Explain what would happen to interest rates if a new process was developed that allowed automobiles to run off oil that was formulated based on lemonade? The technology used to convert this liquid to gas would be pricey but well worth it. What impact would this technology have on interest rates?
● Discuss what ratios should be used to assess the financial health of the potential acquisition?

Sample Solution

A credit rating is an opinion of a particular credit agency regarding the ability and willingness an entity (government, business, or individual) to fulfill its financial obligations in completeness and within the established due dates. A credit rating also signifies the likelihood a debtor will default. It is also representative of the credit risk carried by a debt instrument – whether a loan or a bond issuance. Business scores foster better business relationships. Commercial scores are important not only for financial firms such as lenders, credit card companies, and leasing and insurance firms, but also for non-financial firms that exchange goods or services that permit time to pass before payments are due.

HISTORY AND EVOLUTION The two old Indian contents Charkha Samhita (a text on medication) and Sushruta Samhita (a course book of a medical procedure), consented as soon as 200 B.C and 200A.D. separately shows that clinical examination is certainly not another idea for India. Be that as it may, a great deal has changed in the Clinical exploration situation from that point forward. The world’s most memorable clinical preliminary was kept in the ‘Book of Daniel’ in The Bible. This examination looking like a clinical preliminary was not directed by a clinical master, however by King Nebuchadnezzar an ingenious military pioneer. During his standard in Babylon, Nebuchadnezzar requested his kin to eat just meat and drink just wine, an eating routine he accepted would keep them in sound state of being. Be that as it may, a few young fellows of illustrious blood, who liked to eat vegetables, protested. The ruler permitted these radicals to follow an eating regimen of vegetables and water yet just for 10 days. At the point when Nebuchadnezzar’s examination finished, the veggie lovers showed up preferable fed over the meat-eaters, so the ruler allowed the vegetable eaters to proceed with their eating routine. This most likely was the one of the principal times in development of human species that an open uncontrolled human examination directed a choice about general wellbeing . Avicenna (1025 AD) in his all encompassing ‘Ordinance of Medicine’ depicts a few fascinating principles for the testing of medications. He recommended that in the clinical preliminary a cure ought to be utilized in its normal state in illness without complexities. He suggested that two instances of opposite sorts be contemplated and that study be made of the hour of activity and of the reproducibility of the impacts. These guidelines recommend a contemporary methodology for clinical preliminaries. In any case, there is by all accounts no record of the use of these standards by and by. The principal clinical preliminary of an original treatment was led unintentionally by the well known specialist Ambroise Pare in 1537. In 1537 while presenting with the Mareschal de Motegni he was liable for the treatment of the war zone injured troopers. As the quantity of injured was high and the inventory of ordinary treatment oil was not satisfactory to treat every one of the injured fighters, he needed to fall back on eccentric treatment. He portrays,’ finally my oil needed and I needed to apply in its place a stomach related made of yolks of eggs, oil of roses and turpentine. That evening I was unable to rest at any straightforwardness, expecting that by absence of burning I would find the injured whereupon I had not utilized the said oil dead from the toxin. I raised myself right on time to visit them, when past my expectation I found those to whom I had applied the stomach related medicament feeling yet little agony, their injuries neither enlarged nor aggravated, and having stayed asleep for the entire evening. The others to whom I had applied the bubbling oil were hot with much agony and enlarging about their injuries. Then, at that point, I decided at absolutely no point in the future to consume in this manner savagely the unfortunate injured by harquebuses’. In any case, it would have required an additional 200 years before an arranged controlled preliminary would be coordinated.

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