90 30 2. MNO Inc., a publicly traded manufacturing fim in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Liabilities and Equity Cash $ 20 Accounts payable $ 30 Accounts receivables Notes payable 40 Inventory 90 Accruals Long-term debt 150 Plant and equipment 500 Equity (ret. earnings = $300) 450 Total assets $700 Total liabilities and equity $700 Also assume sales = $500,000; cost of goods sold = $360,000; and the market value of equity is equal to the book value. a. What is the Altman discriminant function value for MNO Inc.? Recall that: Net working capital = Current assets - Current liabilities. Current assets Cash + Accounts receivable + Inventories. Current liabilities Accounts payable + Accruals + Notes payable. EBIT = Revenues - Cost of goods sold. b. Based on the Altman's Z score only, should you approve MNO Inc.'s application to your bank for a $500,000 capital expansion loan? c. If sales for MNO were $250,000, the market value of equity was only half of book value, and all other values are unchanged, would your credit decision change? d. What are the major weaknesses of Altman's Z-score model? 90 30 2. MNO Inc., a publicly traded manufacturing fim in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Liabilities and Equity Cash $ 20 Accounts payable $ 30 Accounts receivables Notes payable 40 Inventory 90 Accruals Long-term debt 150 Plant and equipment 500 Equity (ret. earnings = $300) 450 Total assets $700 Total liabilities and equity $700 Also assume sales = $500,000; cost of goods sold = $360,000; and the market value of equity is equal to the book value. a. What is the Altman discriminant function value for MNO Inc.? Recall that: Net working capital = Current assets - Current liabilities. Current assets Cash + Accounts receivable + Inventories. Current liabilities Accounts payable + Accruals + Notes payable. EBIT = Revenues - Cost of goods sold. b. Based on the Altman's Z score only, should you approve MNO Inc.'s application to your bank for a $500,000 capital expansion loan? c. If sales for MNO were $250,000, the market value of equity was only half of book value, and all other values are unchanged, would your credit decision change? d. What are the major weaknesses of Altman's Z-score model