Acme Corp (a company in the chemicals sector) is interested in installing solar on their rooftop and

has approached Altier to help finance their project. Imagine you are hired as the financial analyst,
your first job before we accept the mandate by the company is to evaluate the financials of the
company and share your analysis if the company is credit worthy for financing. We are seeking a
report with your insights, including calculation of key ratios, industry insights and your
recommendation if project would be eligible for financing with lenders.

1) I studied the financial report and calculated two key financial ratios and significant key
financial metrics in determining whether investing in this company is profitable or not.
 Solvency Ratio (Total debt/ Total Assets):
1) Solvency ratios, also known as leverage ratios, are used by investors to get a
picture of how well a company can deal with its long-term financial
obligations. A company weighed down with debt is probably a less
favourable investment than one with a minimal amount of debt on its
books.
2) Keeping in mind that lenders typically have the first claim on a company's
assets when required to liquidate; therefore, a lower debt/assets ratio
typically indicates less risk.
3) Acme corp has 0 solvency ratio which indicates less risk

 Current Ratio (Current Assets/ Current Liabilities):

1) The current ratio is calculated by dividing current assets by current
liabilities. Since current assets and current liabilities represent activity in the
upcoming 12 months, this ratio can provide insight into the firm’s short-
term liquidity.
2) A higher current asset ratio is favourable as it represents the number of
times current assets can cover current liabilities.
3) Acme corp has current assets = current liabilities in the last three years
which indicates there is no high risk.

2) Hence, looking at the financial metrics and key ratios, I recommend lenders to invest in the
project.