Consider the following information: Net working capital/total assets = 0.9 Retained earnings/total earnings = 0.15 EBIT/total assets
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Question:
Consider the following information:
- Net working capital/total assets = 0.9
- Retained earnings/total earnings = 0.15
- EBIT/total assets = 1.1
- MV of equity/BV of total liabilities = 2
- Sales/total assets = 2.5
Required:
Compute the Z-score. Based on the calculation, explain whether there is a likelihood of financial distress?
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