Q4. MNO Inc., a publicly traded manufacturing firm, has provided the following financial information in its application for a loan. Also assume sales =$500, cost of goods sold =$360, taxes =$56, interest payments =$40 and net income =$44; the dividend payout ratio is 50 per cent and the market value of equity is equal to the book value. (a) What is the Altman discriminant function value for MNO Inc.? Recall that: Net working capital = current assets minus current liabilities Current assets = cash + accounts receivable + inventories Current liabilities = accounts payable + accruals + notes payable EBIT= revenues - cost of goods sold - depreciation Taxes =(EBIT interest )(tax rate ) Net income =EBIT interest - taxes Retained earnings = net income (1 dividend payout ratio ) (b) Should you approve MNO Inc.'s application to your bank for a $500 capital expansion loan? (c) Would the discriminant function change for firms in different industries? What are the implications for the use of these types of models by FIs? Q4. MNO Inc., a publicly traded manufacturing firm, has provided the following financial information in its application for a loan. Also assume sales =$500, cost of goods sold =$360, taxes =$56, interest payments =$40 and net income =$44; the dividend payout ratio is 50 per cent and the market value of equity is equal to the book value. (a) What is the Altman discriminant function value for MNO Inc.? Recall that: Net working capital = current assets minus current liabilities Current assets = cash + accounts receivable + inventories Current liabilities = accounts payable + accruals + notes payable EBIT= revenues - cost of goods sold - depreciation Taxes =(EBIT interest )(tax rate ) Net income =EBIT interest - taxes Retained earnings = net income (1 dividend payout ratio ) (b) Should you approve MNO Inc.'s application to your bank for a $500 capital expansion loan? (c) Would the discriminant function change for firms in different industries? What are the implications for the use of these types of models by FIs