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1. Ratio analysis - Who am I? A Financial Ratio Analysis of Global Products Inc. Who Does It and Why Do They Care? A
1. Ratio analysis - Who am I? A Financial Ratio Analysis of Global Products Inc. Who Does It and Why Do They Care? A variety of interested parties-including existing and prospective creditors (such as lenders and suppliers), employees and managers, shareholders, regulators, security analysts, and competitors-conduct the analysis of a business's financial condition and performance. All parties tend to be interested, to some extent, in the same aspects of company performance, but their particular emphasis on a specific facet of the business's condition or performance may vary. The following parties are either currently affiliated with Global Products Inc. (GPI) or are considering becoming so. Based on the following description, (1) answer the question "Who Am I?" and (2) identify the class of financial ratios that they might be interested in. My company is interested in forming a strategic alliance with GPI. This relationship, in which our companies will create another corporation that will manufacture materials for both our firms, is expected to last for at least 10 years and will cost both firms at least $40 million apiece. As a result: 1. My ratio analysis should focus on the quality of GPI's management-as perceived by the buyers and sellers of the firm's shares and as reflected in the price of GPI's stock. This share price is a critical component of GPI's ratios. 2. However, I also should evaluate GPI's managerial and operational efficiency in using its assets and its profitability. These are described in GPI's ratios, respectively. 3. Similarly, I should examine GPI's ratios to determine if it has the borrowing and debt-service capacity to raise and service the debt on the $40 million if GPI must borrow the funds to make the investment. Who Am I? I am
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