finance project1

memo

To:	Thomas Voglewede, CFO
From:	Your Name
Date:	3/23/2017
Re:	Financial Analysis and Recommendation Regarding Proposed 5 Year Bond Investment of X Company

As per your request, I have completed a credit analysis of X Company in relation to our potential investment in a 5-year bond of the company.

Either start with recommendation and then support it; or, build the case and then end with the recommendation. Recommendation should cover whether you consider the company credit worthy, whether or not the bond should be purchased as an investment and what the target market yield (YTM) for the bond is.

· Discuss company’s ability to generate free cash flow

· Discuss company’s liquidity – reference appropriate ratios

· Discuss company’s level of indebtedness – reference appropriate ratios

· Discuss company’s ability to service the debt – reference appropriate ratios

Ratio	2013	2014	2015	Industry Average

· Calculate recommended market yield for purchase of the bond

· Discuss risk-free-rate

· Discuss Credit Spread

MEMO – Regarding Stock Investment (Follow format above for bond recommendation but use requirements for the stock memo a through d)

APPENDIX (1 Appendix for both memos)

· 3 years of financial data

· Any Additional “data” or research regarding the company

· Actual ratio calculations

· Other calculations not otherwise included in the memo (market yield, bond price, cost of equity, constant growth valuation model, etc.