Financial ratio analysis is one of the best techniques for identifying and evaluating internal strengths and weaknesses. Potential investors and current shareholders look closely at firms’ financial ratios, making detailed comparisons to industry averages and to previous periods of time. Financial ratio analysis provides vital information for developing an IFE Matrix. Instructions Step 1 On a separate sheet of paper, write down numbers 1 to 20. Referring to Nestlé’s income statement and balance sheet, calculate 20 financial ratios for 2015. Step 2 In a second column, indicate whether you consider each ratio to be a strength, weakness, or neutral factor for Nestlé.

MyBusinessCom is inquiring whether to extend an $80,000 credit to a potential new customer. Very often, the following categories are used for the credit-worthiness of a credit seeker: poor risk, average risk, and good risk. Based on historical data, 25 percent of credit seekers similar to the new potential customer are poor risks, 50 percent are average risks, and the remaining are good risks. If credit is granted, the expected profit for poor risks is -$10,000, for average risks $15,000, and good risks $25,000. The company may consult a credit-rating organization for a fee of $7,000 per case evaluated.

(a) (4 marks) Develop a decision analysis formulation of this problem by identifying the decision alternatives, the states of nature, and the pay-off table when the credit-rating organization is not used. (b) (5 marks) Find the EVPI. (c) (2 marks) Does your answer in (b) indicate that consideration should be given to using the credit-rating organization? Justify.