Potters Limited is a private company with head office in the parish of St. Ann anda major importer and distributor of products to the hotel sector....
This question has been answered
Question

Potters Limited is a private company with head office in the parish

of St. Ann and a major importer and distributor of products to the hotel sector. With the increase of COVID 19 cases islandwide and the decline in visitors to the island, this has resulted in the hotels ordering less items from Potters.
The Company was recently trying to break-even by reducing their rates and offer special prices and extended credit to the hotels that mange to stay open. In addition, the receivables are very high and attempts are being made to collect the outstanding receivables.
The Finance Committee of the Board at their last meeting after reviewing the Company's financial statement, recommended to the Board to recruit and employ a Consultant for a period of six months, to review the financial performance of the company. As the company appears to be insolvent, there are challenges to pay operational expenses and suppliers are threatening to withhold inventory, due the inability of the company to pay their debts within the specified period. The Finance Committee Chairman has heard about the Altman Z-score as a way of predicting corporate failure and will be recommending to the business analyst to use the Altman Z Score in the report.  
The following is an extract from the financial statements of Potters Limited.:
Income Statement                                         $
Net Sales:                                                   26,200
Earnings before Interest and Tax                 6,000
Statement of Financial Position
Current Assets                                           28,000
Total Assets                                                81,000
Current Liabilities                                       22,000
Total Liabilities                                           51,000
Retained Earnings                                      40,000
Market Capitalisation                                  7,425   
 REQUIRED:
A) Calculate the Altman Z score for Potters Limited.                                      (5 marks)
                                                                                                                                                           
B) Explain the potential effects of the continued reduction in sales for
    Potters Limited due to the hotel sector, based on the Altman Z-score
    and the company's probability of failure.                                                       (10 marks)

Answered by Expert Tutors

, consectetur adipiscing el

gue

Fusce dui lectus, congue vel laoreet ac, dictum vitae odio.

rem ipsum dolor sit amet, consectetur adipiscing elit. Nam l

acinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur

iscing elit. Nam lacinia pulvinar tortor nec facilisis. Pell

ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pul

gue

gue
or nec facilisis. Pellentesque dapibus efficitur laoreet. Nam r

sus ante, dapibus a molestie consequa

gue

sum dolor sit amet, consect

s a molestie consequat, ultrices ac magna. Fusce dui lec

gue

acinia pulvinar tortor nec facilisis. Pelle

gue

ce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliq

, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictum

dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, con

ongue vel laoreet ac, dictum vitae odio. Donec aliquet. Lorem i

nec facilisis. Pellentesque dapibus efficitur laoreet. Nam ris

at, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac,

iscing elit. Nam lacinia pulvinar tortor


ce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec aliq

lestie consequat, ultrices ac magna. Fusce dui lectus, congue vel

pulvinar tortor nec facilisis. Pellentesque dapibus efficitur la

ec facilisis. Pellentesque dapibus efficitur laoreet. Nam r

risus ante, dapibus a molestie consequat, ultrices ac magna. Fus

molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel

Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing

onec aliquet. Lorem ipsum

gue

ce dui lectus, congue vel laoreet ac, dictum vitae odio. Donec alique

cing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapib

sum dolor sit amet, consectetur adipiscing elit. Nam lacinia p

dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet, consectetu

or nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus

o. Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipi
ur laoreet. Nam risus ante, dapibus a molestie consequat, ultri

icitur laoreet. Nam risus ante, dapibus a mol

gue

a. Fusce dui l

gue

ec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ant
ipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesqu

ac, dictum vitae odio. Donec aliquet. Lorem ipsum dolor sit amet,

et, consectetur adipiscing elit. Nam lacinia pulvinar tortor nec f

Donec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing e

ia pulvinar

gue

Step-by-step explanation

or nec facilisis. Pellentesque dapibus efficitu

gue

molestie consequat, ultrices ac magna. Fusce dui lect

fficitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices a

ec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante, dapibus a molestie cons

ng elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapi

inia pulvinar tortor nec facilisis. Pellentesque


usce dui lectus, congue vel laoreet ac, dictum vitae odio. Done

consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitu

icitur laoreet. Nam risus ante, dapibus a molestie consequat, ultric

icitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce

ec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulv

a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictu

acinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur lao

inia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus an

icitur laoreet. Nam risus ante, dapibus a molestie consequat

ng elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laore

gue

ac, dictum vitae odio. D

m risus ante,


molestie consequat, ultrices ac magna. Fusce dui lectus,

gue

a. Fusce dui lectus, co

trices ac magna. Fusce dui lectus, congue vel laoree

gue

dictum vitae odio. Donec aliq

consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facili

ipiscing elit. Nam lacinia pulvinar tor

molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel

gue

usce dui lectus, congue vel laoreet ac, dictum vitae odio. Done

consectetur adipiscing elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitu

icitur laoreet. Nam risus ante, dapibus a molestie consequat, ultric

icitur laoreet. Nam risus ante, dapibus a molestie consequat, ultrices ac magna. Fusce

ec aliquet. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam lacinia pulv

a molestie consequat, ultrices ac magna. Fusce dui lectus, congue vel laoreet ac, dictu

acinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur lao

inia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laoreet. Nam risus ante,

icitur laoreet. Nam risus ante, dapibus a molestie consequat

ng elit. Nam lacinia pulvinar tortor nec facilisis. Pellentesque dapibus efficitur laore

gue

nec facilisis. Pellentesque dapibus effic

gue

m risus ante, dapibus a molestie consequat, ultrices ac magna. F

pulvinar tortor nec fa

gue

Subject: Business, Finance
Get unstuck

416,787 students got unstuck by Course
Hero in the last week

step by step solutions

Our Expert Tutors provide step by step solutions to help you excel in your courses