1. What are the main business risks associated with UST Inc.? What are the attributes of UST Inc.? Evaluate from the perspective of a credit analyst or bondholder.UST Inc. is a smokeless tobacco company with a long tradition and recognizable brand. A strong brand name can have many associations with high quality, revenue, strength, growth, etc. But this is one of the features that can be like a double-edged lawn. On the one hand, a company with a long tradition is expected to operate stably and prosperously as it has always done, but on the other hand, the company itself may become too self-confident and not see new arrivals and other threats. UST ignored the new entrants, and now they all have growing market share, while only UST Inc.'s total share is decreasing as a result. Small players increase their market share mainly by lowering prices, which the UST has ignored. UST Inc. decided to fight competition not by lowering prices, but by overextending its product lines. However, this may not be the best solution. As the main market player, they were in the best position to confront and win the price war. If UST Inc. had been able to take this step, competitors would likely not be able to keep up with the price cut imposed by UST Inc. and at least some of them would be shut down. Thus, one of the biggest drawbacks of UST policy may be its slow response to new market conditions and, even worse, its response is inappropriate. However, the financial condition of the company plays a very important role in the bond holder's decision and this company has been one of the most profitable companies in America in terms of ROE, ROA and profit margin bully. In addition to declining profits and cash flow in 1997, UST experienced continued increases in sales (10-year compound annual growth rate of 9%), profits (11%), and cash flow (12%). ). They generate their cash flow through their operations. Thanks to their premium prices, they achieve an above-average gross profit margin. So, over the years, UST's revenues are stable and positive, and its statements are generally positive. The company has no cash flow problems. However, there is no product differentiation. This can be a negative aspect for the company, as lawsuits against the tobacco industry are increasing and pose a growing threat to the company..