Question 5

Company Argo has applied for a loan at ANZ Bank. Emma, the credit analyst at the bank, has gathered the following information from the companys financial statements:

Total assets	$115,000
EBIT	7,300
Net working capital	3,800
Book value of equity	21,000
Accumulated retained earnings	19,600
Sales	104,000

The stock price of Argo is $40 per share and there are 8,000 shares outstanding. Calculate the Z-score for this company to predict its likelihood of corporate bankruptcy.

A. 2.74

B. 2.96

C. 3.85

D. 3.43

E. 6.23