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Can someone take a look at this to see if I'm doing it correctly. Thanks Your Name: Tamara Mercer Z-score of a real company (to
Can someone take a look at this to see if I'm doing it correctly. Thanks
Your Name: Tamara Mercer Z-score of a real company (to be revealed later!) The Z-score bankruptcy prediction model uses balance sheet and income information to arrive at a Z-score which can be used to predict financial distress. The formula is laid out below, and amounts for any company can be inserted to compute the z score. Use the provided income statement and balance sheet (see tabs at bottom)to insert amounts in highlighted cells, then interpret the results. Testing reveals that a Z-scoreabove 3.0 indicates that the company is unlikely to fail, and a Z-score below 1.81 indicates that the company is likely to fail. working capital/ total assets = retained earnings/total assets = 632,769 2,546,285 0.248507 x 1.2 0.298208 1,722,271 2,546,285 0.676386 x 1.4 0.94694 EBIT/total assets 983,232 2546285 0.386144 x 3.3 1.274274 EBIT is earnings before interest and taxes (income before tax + interest expense) Sales/total assets MV equity/total liabilities 2990513 2546285 622,487 1.174461 x 0.99 533,916 1.162717 0 x 0.6 0 MV of equity is the common stock price X the number of shares outstanding, the price per share of this company at the end of year was use these amounts: 1,296848 shares X $480 per share and take off last 3 digits as all other amounts are (000) z-score of this company is 3.682139 Interpret the results with 1 complete sentences in a business toneStep by Step Solution
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