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Advanced Fuel

In: Business and Management

Submitted By 6116445
Words 1366
Pages 6
Advanced Fuel Corporation
Kaize Lei
Yu Wu
Minh Nguyen
1. The type of financing largely depends on 3 factors:
- Financial status of AFC
- Amount of upside gain in a diversified portfolio
- Record of past banking involvement in corporate venturing
Advanced fuels Corporation is still at the early stage of formation, thus it is unlikely to break even in the future years and its probability of bankruptcy is high. Due to the difficulty in classifying loans to friends into either current or non-current liabilities, the exact ratio cannot be calculated. If the ratio is less than 1, then this means AFC will have trouble paying interest repayments if business suddenly fails. Investment banks cannot achieve their desired results by forming portfolios of risky debt securities because it cannot share fully in upside gains beyond the stated interest rate.

2. Planning: Finding out all the advantages and disadvantages of the proposal. This involves looking at all the components of the business plan to see if it is reliable and that the information is reasonable. Researching: Find out what Dr. Aplin’s work and education history to establish what his skills are and if the skills are related to the firm he proposes to start. Capitalist’s analysis: This can mean talking to other entrepreneurs who have started business with an innovative idea and have now established themselves as a mature company.
3. Liquidation Value
The liquidation value is the value if the business is liquidated. All existing liabilities including costs associated with liquidation is deducted from the value obtained from selling off all the businesses' assets. Assets are valued at "fire-sale" value and thus gives a minimum estimation. Liquidation value is therefore a measure of the minimum worth of the firm. The advantage of using this approach is that it gives a very conservative valuation of the…...

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