SHOW ALL MATH CALCULATIONS, written out.

Please attach the income statement and balance sheet used.

Please highlight the numbers used on the financial statement.

1. Calculate the 4 ratios indicated on the handout by finding the balance sheet or income statement numbers on the annual financial statements you have procured. NO NOT USE QUARTERLY FINANCIALS.

2. Working Capital = current assets - current liabilities

3. EBIT = Earnings before interest and taxes (operating income)

4. Multiply each ratio by the coefficient given in the second column. This is a constant.

5. Add up each of the 4 components. This is the Z score.

6. Interpret your score based on the information at the bottom of the page.

7. Write a brief paragraph answering the question "Were you surprised with the answer you calculated given what you know of the company?" Tell me a bit about the company you chose. What is the business in?

Credit Analysis Programs Altman's General Model* Not restricted to publicly held manufacturing companies (can be used for private firms, service com- panies, as well as publicly traded manufacturers) Pure Ratio Mean Values of Altman's Sampled Companies Nonbankrupt Coefficient X Pure Ratio Bankrupt Component Working Capital X 0.41 Liquidity Indicator -0.06 6.56 X1 Total Assets Retained Earnings 0.36 Staying Power 3.26 X -0.63 X2 Total Assets EBIT 0.15 Earning Power (ROA) X -0.32 6.72 X3 Total Assets Total Owners' Equity Proportional Equity Strength 2.68 X 0.49 1.05 X4 Total Liabilities Z Score-[X1+X2+X3+X4] Likelihood of Failure Mean Z Score of Companies Sampled Score Bankrupt Nonbankrupt -4.06 7.70 high possible low 1.1 or less 1.2 2.5 2.6 -or greater Credit Analysis Programs Altman's General Model* Not restricted to publicly held manufacturing companies (can be used for private firms, service com- panies, as well as publicly traded manufacturers) Pure Ratio Mean Values of Altman's Sampled Companies Nonbankrupt Coefficient X Pure Ratio Bankrupt Component Working Capital X 0.41 Liquidity Indicator -0.06 6.56 X1 Total Assets Retained Earnings 0.36 Staying Power 3.26 X -0.63 X2 Total Assets EBIT 0.15 Earning Power (ROA) X -0.32 6.72 X3 Total Assets Total Owners' Equity Proportional Equity Strength 2.68 X 0.49 1.05 X4 Total Liabilities Z Score-[X1+X2+X3+X4] Likelihood of Failure Mean Z Score of Companies Sampled Score Bankrupt Nonbankrupt -4.06 7.70 high possible low 1.1 or less 1.2 2.5 2.6 -or greater