What ratios should be used to assess the financial health

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Question 1: Discuss what ratios should be used to assess the financial health of the potential acquisition? (Based on the scenario below and using long-term debt financing to fund this acquisition)

  • 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.

Reference no: EM132518595

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