The balance sheet of Tribulations ltd for the year 2011 is as...

The balance sheet of Tribulations ltd for the year 2011 is as follows:

Fixed Assets

Ksh. '000' Intangible

123,000 Tangible

2,079,500 Investments

10,000

2,212,500

Current Assets

Stocks

479,000 Debtors

1,774,500 Cash and short-term investments

5,000

2,258,500 Current liabilities

Trade creditors

956,500 Bank overdraft

504,000 Other curent liabilities

152,500

1,613,000 Net working capital

645,500 Total assets

2,858,000

Long-term Loans

124,000 Other long-term liabilities

33,000 total non-current liabilities

157,000

Share capital (10 Million shares of ksh 30 each)

300,000

Page 2 of 3 Mackred

Dinga

Income statement of Tribulations Limited for the year to December 31 2011

Ksh.'000'

Sales revenue

1,900,000

Less: Cost of Sales

(880,000)

Gross Profit

1,020,000

Less: operating Expense

(270,000)

Earnings before interest and taxes

750,000

Interest Expense

(130,000)

Profit before tax

620,000

Less: Income Tax Expense

(92,000)

Profit after tax

528,000

Less: proposed dividends

(23,500)

Retained earnings

504,500

Assume that the market value of the company's stocks at the year end was ksh 300 per share and the company generated a negative cash flow in the year amounting to ksh 93 Million.

Required:

Use the following models to assess the financial strength or otherwise of the company;

a) Altman's model Z=1.2WC/TA + 1.4 RE/TA + 3.3 EBIT/TA + 0.6 MVE/TL + 1.0 SL/TA

b) The Springate model Z = 1.03A + 3.07B + 0.66C + 0.4D

c) Fulmer model H = 5.528 (V1) + 0.212 (V2) + 0.073 (V3)+ 1.270 (V4) - 0.120 (V5) + 2.335 (V6)+ 0.575 (V7) + 1.083 (V8) + 0.894 (V9)- 6.075

Profit and loss account

Brought forward

1,896,500 Retained for year

504,500 Shareholder fund

2,701,000 Long-term liabilities & shareholders funds

2,858,000