1. Analyze and evaluate the role of Altman's Z score in determining Rite Aid's financial health and its interpretation (including Chapter 11 bankruptcy possibility).

2. Share and solve the components and equation for the Altman Z score for Rite Aid. (Please Show the work from the income statement/balance sheet, etc. and the calculation in detail).

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References:

Rite Aid Corporation. (2022). Form 10-K 2022 Annual report.

https://s27.q4cdn.com/633053956/files/doc_financials/2022/ar/d3b229ff-5147-4849-bfe1-13cec0816db9.pdf

Rite Aid Corporation (RAD). (2022, July 14). Rite Aid Corporation financials. Yahoo finance. https://finance.yahoo.com/quote/RAD/financials?p=RAD

other sources:

Platt, H. D. (2004). Failure prediction. InPrinciples of corporate renewal(2nd ed., pp. 75-120). University of Michigan Press. (pp. 90-92)

Ashworth, W. (2020, April 28). Bankruptcy Watch: 10 Retail Stocks at Growing Risk. Kiplinger. https://www.kiplinger.com/slideshow/investing/t052-s001-bankruptcy-watch-10-retail-stocks-at growing-risk/index.html

Maurer, M. (2022, June 29). Rite Aid CFO Looks to Cut Debt as Earnings Suffer. The Wall Street Journal. https://www.wsj.com/articles/rite-aid-cfo-looks-to-cut-debt-as-earnings-suffer-11656535577?siteid=yhoof2

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Notes:

The equation for the Altman Z score is: (Platt, 2004)

Z = 1.2(X₁) + 1.4(X₂) + 3.3(X₃) + 0.66(X₄) + 1.0(X₅)

Where:

X₁ = Working Capital / Total Assets

X₂ = Retained Earnings / Total Assets

X₃ = Earnings Before Interest and Taxes / Total Assets

X₄ = Market Value of Equity / Total Liabilities

X₅ = Sales / Total Assets

Interpretation of scores:

< 1.81 are in danger (potential bankruptcy)

>= 3 financially sound

1.81-2.99 need further investigation

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Variable	2022 Value	Coefficient	Product
Working capital/total assets	X1 = (current assets - current liabilites) / total assets =	1.2
Retained earnings/total assets	X2 = Accumulated deficit / total assets =	1.4
EBIT/total assets	X3 = Net loss / total assets =	3.3
Market value of equity/total liabilites	X4 = Most recent Stock closing price / total liabilities =	0.6
Sales/total assets	X5 = total revenues / total assets =	1
Z-score ()
Public Firms, Z-score calculation, : 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5
= 1.2() + 1.4() + 3.3() + 0.6() + 1.0()
=
Rite Aid Corporation (RAD) =

Required Data	Value	Page No.		Information Location (eg. Consolidated Balance sheets, Yahoo finance, etc.)
Current Assets
Current Liabilities
Total Assets
Total liabilities
Retained earnings (Accumulated deficit)
EBIT (Net loss)
Market value (Most recent Stock closing price)				Yahoo Finance - RAD
Sales (total revenues)