16.Tropical, Inc. has provided the following financial information in its application for a loan. Assets Liabilities and Equity ___________________________________________________ Cash $ 20 Accounts Payable $ 30 Accounts Receivables $ 90 Notes Payable $ 90 Inventory $ 90 Accruals $ 30 Long Term Debt $150 Plant and equipment $500 Equity $400 ----------------------------------------------------------------------------------- Also assume sales = $500, cost of goods sold = $360, taxes = $56, interest payments = $40, net income = $44, the dividend payout ratio is 50%, and the market value of equity is equal to the book value. What is the Altman discriminant function value for Tropical, Inc.? Recall that: Net working capital = Current assets minus current liabilities. Current assets = Cash + accounts receivable + inventories. Current liabilities = Accounts payable + accruals + notes payable. EBIT = Revenues - Cost of goods sold - depreciation. Taxes = (EBIT - Interest) (tax rate). Net income = EBIT - interest - taxes. Retained earnings = Net income (1 - dividend payout ratio) Altmans discriminant function is given by: Z = 1.2X1+ 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5 Assume prior retained earnings are zero. X1= Working capital/total assets X2 = Retained earnings/ total assets X3 = EBIT/ total assets X4 = Market value of equity/long term debt X5 = Sales/ total asset