Credit Analysis of Grammar AG: Finance Report on Business Performance

This report presents a business credit analysis of Grammar AG Company, a German-based company specializing in car interior components. The analysis evaluates the company's business model, strengths, and weaknesses within the automotive industry. It examines Grammar AG's financial performance, including revenue trends, strategic alliances, and debt-to-equity ratio. The report highlights financial projections, assessing the company's creditworthiness and financial leverage over time. The analysis incorporates references to industry publications and provides a comprehensive overview of Grammar AG's financial standing and credit risk, offering valuable insights into its operational and financial strategies. The report concludes with an assessment of the company's creditworthiness and future prospects.

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Business credit analysis

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With the ramified economic changes and complex business functioning, banks and
financial institutions before granting loans, needs to implement credit analysis of company. This
analysis helps in evaluating the credit worthiness and company’s capacity to honor its financial
obligations in determined approach. In this report, Grammar AG Company has been taken to
evaluate the credit worthiness. It is observed that it is joint stock Company having is headquarter
in Amberg, Germany which has been running its business since 1990.
Business model of Grammar AG Company
This company is specialized in developing and manufacturing components and system
for car interiors and passengers seat. This business model of company is related to installing
cyber computing enterprises resource planning and entering into integrated strategic planning.
This level of business model has allowed company to establish proper value chain activities to
deliver goods and services to clients. It is considered that entering into strategic alliance with
other organizations assist in delivering proper level of business services to clients. Company has
created core competency in developing and delivering system for car interiors and passengers
seat (Presbitero, Udell & Zazzaro, 2014).
Industry highlighted
Automotive industry has been showing high amount of growth in Germany. It is
evaluated that many new entrants who are coming up with their marketing strategies to sell auto
parts and other components of car are selling their products at very high cost. Grammar AG
Company has created brand image in Germany and shown high amount of growth in Germany.
Therefore, it could be inferred that if Grammar AG Company could expand its business by

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injecting more capital then it will increase its market share and overall growth in determined
approach (Allen, et al. 2014).
Strength and weakness of credit analysis of company.
Strength
After evaluating the annual report and market conditions of Germany Automotive
industry, it could be inferred that Grammar AG Company has high credit worthiness. In addition
to this, it has observed that company has various strategic alliances and invested more than EUR
500 million in its business capital. Company has vision to expand its business with a view to
increase overall client’s satisfaction (Bluhm, Overbeck & Wagner, 2016).
Weaknesses
Grammar AG Company has been facing high amount of challenges such as sluggish
market conditions, loss of business structure, high penalties and traits. The main weakness of
company is related to creation of charge on its assets. Company already had EUR 9.5 million
loans only as promissory loan. Total amount of loan raised by company in the market is around
EUR 110 million (Trampusch, 2014).
Simple model
 Company has vision to expand its business to increase its overall market share.
 Cyber computing ERP system will help Grammar AG to have proper communication channel
and effective business functioning (Bedendo & Colla, 2015).

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Financial projections
 Company has total revenue of EUR 1.42billion and shown more than 5% increase in its total
revenue as compared to last five year data.
 Company has paid consideration of EUR 300 million with a view to enter into strategic alliance
with other partner.
 Debt to equity ratio of company is also
Particular 2014 2015 2016
DEBT 606 739 781
Equity 231 253 270
After evaluating the debt to equity of company, it could be inferred that company has
taken loan and debt which is already very high as compared to its equity capital. In addition to
this, it has increased its debt portion by 20% since last three years. This level of increment in
debt has shown that company has increased its overall financial leverage and debt portion
throughout the time.
With the help of financial projection, it could be considered how much revenue and
Expenses Company would have in future through the time. It could be based on its past years
earning.
Particular 2014 2015 2016 2017 2018 2019
Revenue 1366 1426 1695 1795 1870 2097
This trend analysis has shown that company has increasing its earning throughout the
time and it will increase its sustainability and credit worthiness throughout the time.
Particular 2014 2015 2016
Financial 3.62 3.93 3.89

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leverage
This financial leverage has shown that company maintained stable financial risk. However,
company has effective credit worthiness throughout the time.

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References
Allen, L., Brand, A., Scott, J., Altman, M., & Hlava, M. (2014). Credit where credit is
due. Nature, 508(7496), 312-313.
Bedendo, M., & Colla, P. (2015). Sovereign and corporate credit risk: Evidence from the
Eurozone. Journal of Corporate Finance, 33, 34-52.
Bluhm, C., Overbeck, L., & Wagner, C. (2016). Introduction to credit risk modeling. Crc Press.
Presbitero, A. F., Udell, G. F., & Zazzaro, A. (2014). The home bias and the credit crunch: A
regional perspective. Journal of Money, Credit and Banking, 46(s1), 53-85.
Trampusch, C. (2014). Why preferences and institutions change: A systematic process analysis
of credit rating in Germany. European Journal of Political Research, 53(2), 328-344.
Turner, A. (2017). Between debt and the devil: Money, credit, and fixing global finance.
Princeton University Press.

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Appendix

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