1. Following is information concerning Gilgen Brothers, a residential home builder (all amounts in millions):

	Oct. 31, 2014	Oct. 31, 2013	Oct. 31, 2012
Current assets	$7,010.45	$7,632.02	$8,091.30
Current liabilities	2,211.28	2,419.23	2,812.11
Total assets	7,986.84	8,620.32	8,983.54
Total liabilities	4,749.18	5,093.08	5,567.61
Shares outstanding	158.88	157.01	153.90
Retained earnings	3,053.11	3,398.93	3,363.27
Stock price per share	23.15	24.12	30.20
Sales	4,158.21	5,646.98	7,123.45
Earnings before interest and taxes	-300.53	-3.10	1,125.59

Compute and compare the Altman Z-score for the three years provided, what trend appears? Is Gilgen Brothers more or less likely to go bankrupt given the Z-score in 2012 or 2014?

Answer:

Z-Score	Oct. 31, 2014	Oct. 31, 2013	Oct. 31, 2012
1.2 x (WC/TA)
1.4 x (RE/TA)
3.3 x (EBIT/TA)
0.6 x (MVE/TL)
0.99 x (Sales/TA)
TOTAL Z-Score

Comments: