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MNO, Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. The market
MNO, Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. The market value of equity is 1.58 times the book value of debt. Retained earnings are 5.27% of total assets. Sales are 52% of total assets. Earnings before interest and taxes are 32.87% of total assets. Finally, working capital is 34.25% of total assets. 1. a) What is the Altman discriminant function value for MNO, Inc.? loan? value, would your credit decision change? b) Should you approve MNO, Inc.'s application to your bank for a $5,000,000 capital expansion c) If sales for MNO were 38% of total assets and the market value of equity was only half of book
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