21 A listed company in which you have invested a lot of your personal wealth has just filed for insolvency.

Using Altman’s Z-score analysis, would you have been able to predict its financial distress? What is your interpretation of the results? Are there any figures that would have given you cause for concern? Explain. (100 marks)

Exam Question (45 minutes)

2020

£000 2019

£000 2018

£000 2017

£000 2016

£000 Fixed assets 322,644 344,870 350,614 303,533 203,628 Current assets 349,696 310,489 377,044 336,785 161,131 Current liabilities 320,069 289,848 397,075 370,244 175,526 Long-term liabilities 25,277 33,956 40,175 66,152 31,897 2020 £000 2019 £000 2018 £000 2017 £000 2016 £000 Book value of equity 326,994 331,555 290,408 203,922 157,336 Market value of equity 26,059 243,222 368,308 441,275 868,652 Retained earnings 156,714 164,426 130,472 61,276 23,852 Sales 1,625,034 1,772,358 1,971,905 1,491,914 801,306 EBIT 28,850 89,128 128,345 76,703 33,212