Using the financial statements and additional notes provided in the attached excel file (Final Exam, tabs Sequoia and Crater BS, and Sequoia and Crater IS), analyze the relative credit risk by computing and interpreting the results of the following metrics for both firms:

1. Current and quick ratios (liquidity analysis) for 2020 and 2019 and times interest earned ratio, and the EBITDA coverage ratios for 2020.

2. Liabilities to equity and total debt to equity ratios for 2020 and 2019.

3. Altman Z-scores for the two companies for 2019. 

4. The percentages of operating lease to total lease in 2019 for Sequoia vs. Crater are 30% and 70% respectively? What type of adjustments would you make to the financial statements and what potential impact may that have on your credit risk analysis? 

5. The forecasted levels of sales and cash in 2019 for company Sequoia vs. Crater are as follows: Sales for Sequoia vs. Crater are $71,000 and 54,000 respectively and the cash for Sequoia vs. Crater are $2,210 and 620. Does the forecasted cash deviate from the normal levels for both companies? and why? 

Answer rating: 100% (QA)

What type of adjustments would you make to the financial statements and what potential impact may that have on your credit risk analysis Assuming that you are the analyst for a large investment firm a... View the full answer