Working Capital Management $-$ Credit scoring

As a trainee in the loans department at HSOB plc$,$ your line manager has asked you to

assess the financial strength of six corporate clients using the Altman $Z$ score model for

bankruptcy prediction. Details of the clients follow:Unch, Bunch, and Crunch are public companies whilst Lunch, Munch, and Punch are private

companies.

Required:

$($a$)$ Calculate and interpret the score for each client.

$($b$)$ Discuss the role of any of the three ratios you have used above in bankruptcy prediction.

$($c$)$ Briefly explain two limitations of ratio analysis in company evaluation.LECTURER: MR CS CHONG

Working Capital Management $-$ Credit scoring

As a trainee in the loans department at HSOB plc$,$ your line manager has asked you to

assess the financial strength of six corporate clients using the Altman $Z$ score model for

bankruptcy prediction. Details of the clients follow:Unch, Bunch, and Crunch are public companies whilst Lunch, Munch, and Punch are private

companies.

Required:

$($a$)$ Calculate and interpret the score for each client.

$($b$)$ Discuss the role of any of the three ratios you have used above in bankruptcy prediction.

$($c$)$ Briefly explain two limitations of ratio analysis in company evaluation.