A. Assume that you are a banker and that each company has applied to you for a 90-day loan of $12,000. Which would you consider to be the more favorable prospect?
At glance I would consider Moon Corporation as the most favorable prospect due to the amount of cash on hand, compared to Star Corporation this is a good sign of stronger company performance and more opportunities for future investments. Also, Moon’s total liabilities is significantly lower than Star and more manageable.
B. Assume that you are an investor considering purchasing all the capital stock of one or both of the companies. For which business would you be willing to pay for the higher price? Do you see any indication of a financial crisis that you might face shortly after buying either company? …show more content…
Although Moon reinvested less than Star, their company is generating a higher return on their investments. So I would be willing to pay a higher price for Moon while I wouldn’t consider purchasing with Star unless the price was low enough to the point where it wouldn’t hurt anything if things didn’t turn out so well. I can see a financial crisis if Star continues to reinvest in the company and not generate large enough revenues to
At glance I would consider Moon Corporation as the most favorable prospect due to the amount of cash on hand, compared to Star Corporation this is a good sign of stronger company performance and more opportunities for future investments. Also, Moon’s total liabilities is significantly lower than Star and more manageable.
B. Assume that you are an investor considering purchasing all the capital stock of one or both of the companies. For which business would you be willing to pay for the higher price? Do you see any indication of a financial crisis that you might face shortly after buying either company? …show more content…
Although Moon reinvested less than Star, their company is generating a higher return on their investments. So I would be willing to pay a higher price for Moon while I wouldn’t consider purchasing with Star unless the price was low enough to the point where it wouldn’t hurt anything if things didn’t turn out so well. I can see a financial crisis if Star continues to reinvest in the company and not generate large enough revenues to