9.3 Ali plc and Bhaskar plc both operate electrical stores throughout the UK. The financial statements of each business for the year ended 30 June 2016 are as follows:

Statements of financial position as at 30 June 2016 Ali plc Bhaskar plc £m £m ASSETS Non-current assets Property, plant and equipment (cost less depreciation)
Land and buildings 360.0 510.0 Fixtures and fittings 87.0 91.2 447.0 601.2 Current assets Inventories 592.0 403.0 Trade receivables 176.4 321.9 Cash at bank 84.6 91.6 853.0 816.5 Total assets 1,300.0 1,417.7 EQUITY AND LIABILITIES Equity £1 ordinary shares 320.0 250.0 Retained earnings 367.6 624.6 687.6 874.6 Non-current liabilities Borrowings – loan notes 190.0 250.0 Current liabilities Trade payables 406.4 275.7 Taxation 16.0 17.4 422.4 293.1 Total equity and liabilities 1,300.0 1,417.7 Income statements for the year ended 30 June 2016 Ali plc Bhaskar plc £m £m Revenue 1,478.1 1,790.4 Cost of sales (1,018.3) (1,214.9)
Gross profit 459.8 575.5 Operating expenses (308.5) (408.6)
Operating profit 151.3 166.9 Interest payable (19.4) (27.5)
Profit before taxation 131.9 139.4 Taxation (32.0) (34.8)
Profit for the year 99.9 104.6 Ali plc paid a dividend of £135 million and Bhaskar plc £95 million during the year. The market values of a share in Ali plc and Bhaskar plc at the end of the year were £6.50 and £8.20, respectively. The dividend income tax credit rate can be taken to be 10 per cent.
Required:

(a) Calculate the Z-scores for Ali plc and Bhaskar plc using the Altman model given in the text.

(b) Comment on the Z-scores for the two businesses and on the validity of using this particular model to assess these businesses.