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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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