The following statements relates to Shida LTD for the period ended 30thSeptember, 2011.

Statement of Financial Position for year ending 30thSeptember, 2011

Non-current Assets shs000 shs000

Land 1000

Plant 5,000

Equipment 8,000 14,000

Current Assets

Inventories/stock 4,000

Accounts receivable/debtors 3,000

Cash 400 7400

Total assets 21,400

Capital and liabilities

Preference share capital 1,000

Ordinary share capital 1,000

Paid in capital in excess 2,000

Retained earnings 1,400 5,400

Non-Current liabilities

Mortgage 4,000

Debentures 6,000 10,000

Current liabilities

Accounts payable 5,000

Notes payable 1,000 6,000

21,400

Income Statement shs000

Sales 6,000

Cost of sales (3,500)

Selling and administration expenses (1,000)

EBIT 1,500

Interest (1,100)

EBT 400

Tax 30% 120

PAT/EAT 280

Required

a)Predict the companys failure using Altman's Z-Score and interpret its meaning (10mks)

(b)Explain FIVE options in dealing with financial distress in the corporate sector (10 marks)