Finance And Financial Management Essay

4959 WordsDec 5, 200820 Pages
Contents Introduction 1 Part A 1 Liquidity ratios 1 Efficiency ratios 2 Capital structure ratios 3 Profitability ratios 3 Investors/ shareholders ratios 4 Part B 6 Bond Rating Criteria 7 Part C 8 Non-callable bonds 8 Callable bonds: 10 Part D 10 Summary 11 Bibliography 12 Introduction Steel manufacturing company L has successfully operating in steel market in last two years. In spite of last year issuance of long-term debt (3.5 million) and equity (11.672 million) the company L decided to raise its funds for working capital requirements by issuing again this year. Furthermore, new bonds of company L have been assessed with rating A by local rating agency, which equivalent to Standard and Poor’s A rating. As senior consultant in investment bank I need to write a report to Client requesting detailed report about main criteria used by rating agencies to rate bonds of companies. In addition providing correlation between bond ratings and price (interest rate) paid on bonds is essential analyze basing on the Profit and Lost and Balance sheet of company. Furthermore, addition application should be presented on calculation of an “intrinsic value” of new shares of company L. Part A Following part of report will analyze the financial performance, strength, weakness and problems of entity. Ratio analysis will show all this factors in detail with industrial evaluation. Liquidity ratios – it is essential to define the current ratio of the firm in case of bankruptcy or other unexpected events. And company’s first and important indicator of financial performance is , which means the current liabilities of company L is exceeding its current assets and in emergency case, this may create some problems. However, in 2006 has increased and it means that company L has increased its assets with stock and debtors or increased current assets more than

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