QUESTION 2 (20 marks)

Calculate the Altmans Z value for the following farms. (10 marks)

Which of the two farms will you invest into and why? (5 marks)

What are the limitations of the Altmans Z statistics? (5 marks)

Variables	Crystal Farms	Lavish farm
X1(net working capital /total asset)	0.4563	0.1354
X2(retained earnings/total asset)	0.5236	0.0124
X3(EBIT/total assets)	0.1324	0.2013
X4(market value of equity/book value of total liability)	2.5632	0.2435
X5(sales/total asset)	0.9085	0.4032
Altmans Z - values