Question

Compute and Interpret the Z-score Balance sheets and income statements for Lockheed Martin Corporation follow. Refer to these financial statements to answer the requirements. Consolidated Statements of Earnings Year Ended December 31 (In millions) 2016 2015 Net sales Products $ 40,365 $ 34,868 Services 6,883 5,668 Total net sales 47,248 40,536 Cost of sales Products (36,616) (31,091) Services (6,040) (4,824) Severance and other charges (80) (82) Other unallocated costs 550 (47) Total cost of sales (42,186) (36,044) Gross Profit 5,062 4,492 Other income, net 487 220 Operating profit 5,549 4,712 Interest expense (663) (443) Other non-operating income (expense), net 30 Earnings before taxes 4,886 4,299 Income tax expense (1,133) (1,173) Net earnings from continuing operations 3,753 3,126 Net (loss) earnings from discontinued operations 1,549 479 Net earnings $5,302 $3,605

Answer 1

Page : Date: 1 Z - Score 1.2 A +1.43+3.30 +0.60 + TOE A. Working Capital & Tofal Astele B = Retained Sprachs & Totel Alsets C - Earring before i lcrest & Tax & Tofal Asiete Do Maplest Value of Equitful To fal (pabilities E = Sales & Tofal Assets Si (in millions) .. I particulars 2016 2015 Working Capital: Cwerrent Assets 2,556 - Cwycent li bichd 203 - Working Capital I 0.013 of Total Assets 06.053 I Retaineel Eeyning 1 0.279 0.289 073 TA Ce Eugning Before Interost & Tax - Total Assets 0.102 0.067 lo 1, Myket Value of Equity steity & Total lécbility sales & Total offset 1.513 | 0.9660.622 E

Z score for 2016 = 1. 2A + 1.4B + 3.36+0.6D + 1.0€ -(1.2 x 0.053) +(1.4 x 0.279) +(3.34 0.102) +(6.6x1.513) + (1.0x 0.989 20.064 10.391 +0.337+0.908 +0.963 - 2.688 Z score for 2015 1.24 +1.4B + 3.3( + 0.6 D + 1.0 E = (1.2 x 0.013) + (1.410.269)+(3.370.087) + (0.6 X 1.351) + (1.06.822) ! = 0.016 + 0.405+0.287 +0.811 +0.822 = 2.341 Here both 2016 Z-Score and 1 2015 z-score are in Creey as both ance below 3 2 area sore.