This example related to CFA level 1

g. calcalate and interpret financial ratios used in credit analysis: h. evaluate the credit quality of a corporate bond ssuer and a bond of that iswer, given hey financial ratios of the iswer and the indwatry. EXAMPLF 6 Mallinckrodt PL.C (Mallinclerodr) is an Ireland-incorporated sperialty pharmaceutical company. As a credit analvot, you have beren asked bo asses its creditworthines - on its own, compared to a coenpetitor in its overall industry. and compared with a similarh rated coenpasy in a diflereat iedantry. Using the financial stafements provided in Eathibits 10 throush 12 for the three year ending 31 December 2015, 2016, and 2017, address the following 1 Calculate Mallinckrodrk operating profit markint FHITDA, and free cash flow after doidende. Comement on what theme messurvs indicase abost Mallindrodtis profitahility and cash flow. 2 Determine Mallinckrodt i leverape ratiok debe FBATDA, dehe/capital, free cach flow after dividendu/debt. Comment on what these leverage ratios indicate about Mallinckrodt's creditworthiness 3 Calcelate Mallinckoderk intereat coweraper ailits both EBTT and FRITDA. Comment on what these corerage ratbos indicate alhout Mallinclerodt: creditworthiness. 4 Using the credit ratios provided in Fakibit 11 on Jolhson \&k folnson. compare the creditworthiness of Mallinckodt relative te lohnson A Johnson. 5. Compare the Exhabit 12 credit ratios of Lasmbour based ArceloeMittal. ane of the world's largest global steclmuliers, wath those of Mlallinclrodt. Comment on the volatality of the credil fatios of the two compunies. Which company looks to be more cyclicale What industry factors inight explain some of the diflenences? In cemparing the creditworthiness of these twe coenpanies, what othre factors might be coenaidered to offet greater volatility of credit ration? Source, CRA furd income trxtboad tevel 1 Source cha fived incume Peathook ievet 1 Saurer. CrA Fined incene Rextboot Lhel 1. Special fopics 490 TA Dollo Morof. Fundomentals of Credit Analyais Consolidated Statements of Cash Flow Cash Flows from lnvesting Activities Cash Flows from Financing Acthities: Effect of currency rate changes on cash (11.6) (1.2) 2.5 Net increase (decrease) in cash asd (345i0) (227 3) is cash equivalents Canh and cash equivalents at beginnise F7. 6 Sks.4 Wh.1 of period Cash and cash equivalents at end of 42.6 Be1.t 1.2.1. period Seune Campany ASingh, Lounis, Soples \& Cangans. Source: CFA Fixed income fextbook Level 1. g. calcalate and interpret financial ratios used in credit analysis: h. evaluate the credit quality of a corporate bond ssuer and a bond of that iswer, given hey financial ratios of the iswer and the indwatry. EXAMPLF 6 Mallinckrodt PL.C (Mallinclerodr) is an Ireland-incorporated sperialty pharmaceutical company. As a credit analvot, you have beren asked bo asses its creditworthines - on its own, compared to a coenpetitor in its overall industry. and compared with a similarh rated coenpasy in a diflereat iedantry. Using the financial stafements provided in Eathibits 10 throush 12 for the three year ending 31 December 2015, 2016, and 2017, address the following 1 Calculate Mallinckrodrk operating profit markint FHITDA, and free cash flow after doidende. Comement on what theme messurvs indicase abost Mallindrodtis profitahility and cash flow. 2 Determine Mallinckrodt i leverape ratiok debe FBATDA, dehe/capital, free cach flow after dividendu/debt. Comment on what these leverage ratios indicate about Mallinckrodt's creditworthiness 3 Calcelate Mallinckoderk intereat coweraper ailits both EBTT and FRITDA. Comment on what these corerage ratbos indicate alhout Mallinclerodt: creditworthiness. 4 Using the credit ratios provided in Fakibit 11 on Jolhson \&k folnson. compare the creditworthiness of Mallinckodt relative te lohnson A Johnson. 5. Compare the Exhabit 12 credit ratios of Lasmbour based ArceloeMittal. ane of the world's largest global steclmuliers, wath those of Mlallinclrodt. Comment on the volatality of the credil fatios of the two compunies. Which company looks to be more cyclicale What industry factors inight explain some of the diflenences? In cemparing the creditworthiness of these twe coenpanies, what othre factors might be coenaidered to offet greater volatility of credit ration? Source, CRA furd income trxtboad tevel 1 Source cha fived incume Peathook ievet 1 Saurer. CrA Fined incene Rextboot Lhel 1. Special fopics 490 TA Dollo Morof. Fundomentals of Credit Analyais Consolidated Statements of Cash Flow Cash Flows from lnvesting Activities Cash Flows from Financing Acthities: Effect of currency rate changes on cash (11.6) (1.2) 2.5 Net increase (decrease) in cash asd (345i0) (227 3) is cash equivalents Canh and cash equivalents at beginnise F7. 6 Sks.4 Wh.1 of period Cash and cash equivalents at end of 42.6 Be1.t 1.2.1. period Seune Campany ASingh, Lounis, Soples \& Cangans. Source: CFA Fixed income fextbook Level 1