SUPPLY CHAIN MANAGEMENT

Beta Transportations is considering issuing a commercial bond in order to fund future investment projects. Assume that you are an investor. Calculate the required amounts and ratios: a) working capital (for 2021 and 2020), b) current ratio (for 2021 and 2020), c) acid-test ratio (for 2021 and 2020), d) cash ratio (for 2021 and 2020), e) debt to asset ratio (for 2021 and 2020), f) interest coverage ratio (for 2021 and 2020), g) return on assets (for 2021 and 2020). Then reflect on those numbers. Would you recommend investing in Beta Transportations when you also consider its performance?

Calculate the Altman Z score for Beta Transportations for the years 2021 and 2020. Would your recommendation remain the same as in Activity A?

Below you can find Beta Transportations financial statements for 2020 and 2021 (all amounts are in euro): Assets Balance Sheet Statement - Beta Transportations 2021 2020 Liabilities & Shareholders' Equity 2021 2020 Current Assets Cash and Cash Equivalents Accounts Receivable Inventories Prepaid expenses Total Current Assets Fixed Assers Property, plant and equipment Total Fixed Assets 120.000 226,000 214,200 11.400 571,600 60,000 158,000 213,800 12.200 444,000 66,000 115.000 181,000 Current Liabilities Notes payable 80,000 Accounts payable 201,200 Total Current Liabilities 281,200 Long-term Liabilities Long term loan 800,000 Total Long-term Liabilities 800,000 820.000 820.000 1,320,000 1,330,000 1,320,000 1,330,000 Total Liabilities 1,081,200 1,000,000 Shareholders' Equity Common Stock 400,000 Retained earnings 410,400 Total Shareholders' Equity 810,400 Total Liabilities and 1,774,000 Shareholders' Equity 1,891,600 400.000 373,000 773,000 Total Assets 1,891,600 1,774,000 2020 900.000 (540.000) 360,000 (45,000) Income Statement - Beta Transportations 2021 Revenues 1,500,000 Cost of Goods Sold (960.000) Gross Income 540,000 Selling, general and administrative expenses (50.000) (SG&A) Personnel expense (100,000) Depreciation and amortization (150.000) Earnings before interest and taxes (EBIT) 240,000 Interest Expenses (14.400) Income Before Taxes 225,600 Taxes (45.120) Net Income 180,480 (90,000) (135.000) 90,000 (33.000) 57.000 (11.400) 45.600