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
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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Intermediate Accounting 2014 FASB Update
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
15th edition
978-1118938782, 111893878X, 978-1118985311, 1118985311, 978-1118562185, 1118562186, 978-1118147290
