REQUIRED TASK: Referring to the financial statements below, apply the Altman's Z-score model 1 to predict ELVA's likelihood of financial distress. Interpret your results, including a comment on the change between 2006 and 2007. ELVA Products, Inc. Balance Sheet, As of December 31, 2007 Assets 2007 2006 Cash and Equivalents 52,000 57,600 Accounts Receivable 402,000 351,200 Inventory 836,000 715,200 Total Current Assets 1,290,000 1,124,000 Plant & Equipment 527,000 491,000 Accumulated Depreciation 166,200 146,200 Net Fixed Assets 360,800 344,800 Total Assets 1,650,800 1,468,800 Liabilities and Owner's Equity Accounts Payable 175,200 145,600 Short-term Notes Payable 225,000 200,000 Other Current Liabilities 140,000 136,000 Total Current Liabilities 540,200 481,600 Long-term Debt 424,612 323,432 Total Liabilities 964,812 805,032 Common Stock 460,000 460,000 Retained Earnings 225,988 203,768 Total Shareholder's Equity 685,988 663,768 Total Liabilities and Owner's Equity 1,650,800 1,468,800 ELVA Products, Inc. Income Statement, For the Year Ended December 31, 2007 ($ in 000's) 2007 2006 Sales 3,850.00 3,432.00 Cost of Goods Sold 3,250.00 2,864.00 Gross Profit 600.00 568.00 Selling and G&A Expenses 330.30 240.00 Fixed Expenses 100.00 100.00 Depreciation Expense 20.00 18.90 EBIT 149.70 209.10 Interest Expense 76.00 62.50 Earnings Before Taxes 73.70 146.60 Taxes 29.48 58.64