Question

Find the Altman Z Score Rating.

Net Working Capital = -7538

Sales= 67684

R/E= 94918

Book Value Liabilities= 67516

MV Equities 304702

BV Equities= 47579

Total Assets= 115095

Market Capital= 303,774

P/S= 928000

The Z score Analysis should be either 4.79 or 7.1 but I cannot figure out market value of Equity.

Using the Z score of :

Z= 1.2X + 1.4X + 3.3X +.6X + .999X

Please solve for the Z Score analysis, show work and explain.

Answer 1

Assuming Z-score is 4.79

Z-Score = 1.2(A) + 1.4(B) + 3.3(C) + 0.6(D) + 0.999(E)

4.79 = 1.2(-0.07) + 1.4(0.82) + 3.3(C) + 0.6(4.51) + 0.999(0.59)

4.79 - 4.36 = 3.3( C )

0.43 / 3.3 = C

C = 13.03%

If alman score is 4.79 then EBIT / Assets = 13.03%

Hnece EBIT = 115095 * 13.03% = 14,996.88

A = Working Capital / Total Assets

A = -7538 / 115095

A = -0.07

B= Retained Earnings / Total Assets

B = 94918 / 115095

B = 0.82

C= Earnings Before Interest & Taxes (EBIT) / Total Assets

D= Market Value of Equity / Total Liabilities

D = 304702 / 67516

D = 4.51

E= Sales / Total Assets

E = 67684 / 115095

E = 0.59

Please note market value of equity is given 304702, The thing not provided in question is EBIT, Which is calculated above