Question # 4: The following data are adapted from a recent annual report of Non Public Limited Company of packing materials. Total assets $100 million Current assets 40 million Current liabilities 35 million Long-term debt (book) 50 million Total stockholders' equity (book) 15 million Retained earnings 10 million Sales 150 million EBIT 8 million Book value of equity Market Value of debt 30 million 35 million Required: Calculate standard Z- score for the company and comment on the health of the company Question # 5: The following information is given about King Corporation a leading publically trading fan manufacturing company. Sales: $1M EBIT: $500,000 Total Assets: $2M Book Value of Total Liabilities: $1M
Retained Earnings: $1M Market Value of Equity: $3M Net Working Capital: $500,000 Required: Calculate Z- Score for the King Corporation and comment on the financial health of the company Question # 6: Arid Company is a nonmanufacturing company. Some financial information is provided about the company. Sales 150,000 Current assets 100,000 Current liabilities 50,000 Total assets 1,000,000 Operating earnings 75,000 Total liabilities 550,000 Price per share 12.36 Face value per share 10 Outstanding shares 100,000 Retained earnings 100,000 Required: Use the information to calculate z-score and comment on the financial health of the company. Question # 7: The Following data is available for Shahtaj Sugar Mills Limited a leading sugar manufacturing company of Pakistan. Variables Shahtaj Sugar Mills Current Assets 180,000 Current liabilities 30,000 Total Assets 250,000 Retained Earnings 60,000 Earnings before interest and taxes 50,000 Market Price per share 16.5 Number of shares outstanding 9,000 Book value of total debt 80,000 Sales 200,000
Required: According to the Altman model to measure financial distress, compute the Z score and comment whether company is likely to experience financial failure?
- Fall '19
- Balance Sheet, Generally Accepted Accounting Principles, Altman