Payless Cashways operates a chain of retail stores that offers home improvement products for professional craftsmen (carpenters, plumbers, painters) as well as do-it-yourself homeowners. The firm filed for Chapter 11 bankruptcy protection on July 21, Year 7. The table presents selected financial data for Payless Cashways for each of the four fiscal years ending November 30, Year 3, Year 4, Year 5, and Year 6 that preceded its bankruptcy filing.

	Financial Data for Payless Cashways (amounts in thousands)
Year Ended November:	Year 6	Year 5	Year 4	Year 3
Sales	$2,642,829	$2,680,186	$2,722,539	$2,601,003
Net Income (Loss) Before Interest and Taxes	$10,458	($60,562)	$161,792	$151,086
Interest Expense	$60,488	$61,067	$65,571	$125,247
Net Income (Loss)	($19,078)	($128,549)	$44,889	($36,159)
Current Assets	$450,497	$442,679	$449,870	$427,702
Total Assets	$1,293,118	$1,344,436	$1,495,882	$1,458,481
Current Liabilities	$319,593	$344,279	$310,742	$345,560
Long-term Debt	$618,667	$608,627	$654,131	$640,127
TotalLiabilities	$1,003,387	$1,036,273	$1,060,017	$1,071,170
Retained Earnings (Deficit)	($238,997)	($219,919)	($91,370)	($136,259)
Working Capital Provided by Operations	$95,400	$78,257	$127,335	$96,411
Cash Flow Provided by Operations	$32,447	$108,428	$117,330	$109,027
Capital Expenditures	$40,117	$67,281	$81,906	$49,982
Common Shares Outstanding	39,959	39,914	39,874	39,537
Market Price per Share	$1.125	$3.625	$8.250	$11.000

Question 1

Using these analyses, discuss the most important factors that signal the bankruptcy of Payless Cashways in Year 7.