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Using the Case: "Friendly Cards Inc." (Harvard Business School case, no. 9-293-135):

1. Perform a ratio analysis of Friendly Cards for 1985-1987 and discuss the company's health. Decided if Friendly Cards should accept the West Coast investors offer and issue new equity.

2. Perform a Pro Forma Analysis for Friendly Cards' financials from 1988-1990 to show what is likely to happen the company's bond covenants if the status quo continues.

3. Perform a NPV analysis to see if Friendly Cards should purchase the envelope machine (a reasonable WACCT should be sought)

4. Perform a pro forma for Creative Designs to show what would happen if Friendly Cards purchased the company. Then do a valuation of the decision to buy Creative Designs (balance the asking price against the PV of Creative Designs free cash flows).

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Solution Summary

A ratio analysis, pro forma analysis, and NPV analysis for Friendly Cards Inc are completed. Creative Designs is also compared to Friendly Cards through a pro forma analysis to see if it would be a good decision.

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