2 Assume now that you are in 2020 and the company has experienced a torrid year. What is the Z-score for the firm? Does this give you any insight into the risk or insolvency status of the firm?

In 2020, the wearable technology firm, HealingTech plc, applied to go into administration. The decision was made when the company realized its cash balance of £16.6 million could not meet its liabilities of £29.7 million.
The firm’s key statistics, income statement and balance sheet for a number of years are given below.
Key statistics:
31/03/2020 £000 31/03/2019 £000 31/03/2018 £000 31/03/2017 £000 31/03/2016 £000 Turnover 13,665 11,420 5,809 4,187 1,914 Profit (loss) before taxation −520 2,396 421 887 −476 Net tangible assets (liab.) 8,114 8,454 2,208 3,824 1,317 Shareholders’ funds 8,450 6,866 2,440 2,186 l,626 Profit margin −3.81 20.98 7.25 21.18 −24.89 Return on shareholders’
funds −6.15 34.90 17.25 40.58 −29.29 Return on capital employed −6.13 27.65 17.25 21.85 −29.29 Liquidity ratio (x) 1.20 1.26 1.06 1.15 1.06 Gearing (%) 82.97 140.64 363.40 210.75 77.85 Number of employees 44 26 18 15 14 Income statement:
31/3/2020 31/3/2019 31/3/2018 31/3/2017 Turnover 13,665 11,420 5,809 4,187 Cost of sales −3,997 −3,279 −2,443 −736 Gross profit 9,668 8,141 3,366 3,451 Administration expenses −10,553 −5,770 −2,990 −2,632 Other operating income pre OP 382 54 Operating profit −504 2,425 376 820 Total other income and interest received 33 29 110 113 Profit (loss) before interest paid −471 2,454 486 933 Interest received 33 29 Interest paid −49 −58 −65 −46 Net interest −16 −29 −65 −46 Profit (loss) before tax −520 2,396 421 887 Taxation 104 −670 −153 −337 Profit (loss) for period −416 1,726 268 550 Balance sheet:
Fixed assets 2020 2019 2018 2017 Tangible assets 1,270 734 254 189 Intangible assets 372 212 232 236 Investments 27 364 489 Fixed assets 3,653 2,956 2,495 2,433 Current assets Trade debtors 2,318 4,139 2,389 2,254 Bank and deposits 27,371 23,260 16,567 16,572 Other debtors 8,944 0 0 365 Prepayments 1,589 1,289 Deferred taxation 133 Investments 7,238 3,953 5,176 Current assets 40,356 36,816 26,674 24,367 Current liabilities Trade creditors −20,588 −14,207 −12,802 −12,067 Short-term loans and overdrafts −6,974 −7,856 −8,867 −2,733 Corporation tax 0 −333 −28 −29 Accruals −869 −569 −336 −245 Other current liabilities −5,079 −6,157 −3,051 −6,147 Current liabilities −33,511 −29,123 −25,083 −21,221 Total assets 41,997 37,789 27,523 25,281 Long-term liabilities Long-term debt −1,800 −1,700 Provisions for other liabilities −37 −174 Long-term liabilities −37 −1,800 −1,874 Shareholders’ funds Issued capital 8,012 6,012 3,312 3,312 Profit (loss) account 319 735 −991 −1,258 Other reserves 118 118 118 132 Shareholders’ funds 8,450 6,866 2,440 2,186