A. How did the bankruptcy risk of the Tribune Company change between fiscal 2006 and 2007? Explain why.

B. How did the bankruptcy risk of Washington Post change between fiscal 2006 - 2007? Explain why.

C. The Tribune Company filed Ch 7 bankruptcy in December 2008. Based on the analysis, would you have predicted The Tribune Company or The Washington Post Company to file bankruptcy? Explain why.

Tribune Company:

2006

Working Capital 1.2[(1346-2549)/13401= -.11

Retained Earnings 1.4[(3138/13401)]= .33

EBIT/Assets 3.3[(1085/13401)]= .27

Mkt. Value Equity/Liabilities .60[(307*58.69)/13401]= .81

Sales/ Assets1 .00[(5444/13401)]= .41

Z Score 1.70

2007

Working Capital 1.2[(1385-2190)/13150]= .07

Retained Earnings 1.4[(-3474/13150)]= -0.37

EBIT/Assets 3.3[(619/13150)]= .05

Mkt. Value Equity/Liabilities .6[(239*45.04)/13150]= .82

Sales/ Assets 1.0[(5063/13150)]= .39

Z Score .59

Altmans Z-Score for Washington Post - 2006

Working Capital/Assets: 1.2[($935 $812)/$5,381] ............................. 0.027

Retained Earnings/Assets: 1.4($4,120/$5,381) ...................................... 1.072

EBIT/Assets: 3.3($544/$5,381) .............................................................. 0.334

Mkt. Value Equity/Liabilities: 0.6[(10 $711.53)/$2,222] ......................... 1.921

Sales/Assets: 1.0($3,905/$5,381) ........................................................... 0.726

Z-Score .......................................................................................... 4.080

Probability of Bankruptcy ................................................................... 0.1%

2007

Working Capital/Assets: 1.2[($995 $1,013)/$6,005] ........................... (0.004)

Retained Earnings/Assets: 1.4($4,330/$6,005) ...................................... 1.010

EBIT/Assets: 3.3($505/$6,005) .............................................................. 0.278

Mkt. Value Equity/Liabilities: 0.6[(10 $759.25)/$2,543] ......................... 1.791

Sales/Assets: 1.0($4,180/$6,005) ........................................................... 0.696

Z-Score ......................................................................................... 3.771

Probability of Bankruptcy .................................................................. 0.4%