Question

Fair-to-Midland Manufacturing, Inc. (FMM), has applied for a loan at True Credit Bank. Jon Fulkerson, the credit analyst at the bank, has gathered the following information from the company’s financial statements:

  

Total assets	$103,000
EBIT	8,300
Net working capital	4,800
Book value of equity	33,000
Accumulated retained earnings	18,200
Sales	106,000

   

The stock price of FMM is $35 per share and there are 6,400 shares outstanding. What is the Z-score for this company? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

Answer 1

B D E F G H $ $ A 1 2 3 Total assets 4 EBIT 5 Net working capital Book value of equity 6 51,800 =Total assets-book value of equity-retained earnings 1,03,000.00 Book value of liabilities 8,300.00 4,800.00 33,000.00 18,200.00 Accumulated retained earnings 7 8 Sales 1,06,000.00 2,24,000.00 Variable 9 Market value of equity 10 11 X1 12 X 13 X7 14 X 4 15 X 5 16 17 18 19 Working capital/Total assets retained earnings / total assets EBIT / total assets market value of equity / book value of total liabilities sales / total assets =Shares outstanding price/share Co-efficient =variable co-efficient 0.046601942 1.2 0.05592233 0.176699029 1.4 0.247378641 0.080582524 3.3 0.26592233 4.324324324 0.6 2.594594595 1.029126214 1 1.029126214 Z-score 4.193 =1.2X1+1.4X2+3.3X3+0.6X4+1.0X5

А B D E F $ 103000 8300 4800 $ Book value of liabilities =B3-B7-B6 Total assets-book value of equity-retained earnings 2 3 Total assets 4 EBIT 5 Net working capital 6 Book value of equity 33000 7 Accumulated retained earnings 18200 106000 8 Sales Market value of equity 9 =35*6400 10 Variable =B5/B3 =B7/B3 11 X1 12 X2 13 X3 14 X 4 15 X5 Working capital/Total assets retained earnings / total assets EBIT / total assets market value of equity / book value of total liabilities sales / total assets =Shares outstanding price/share Co-efficient =variable*co-efficient 1.2 =D11*C11 1.4 =D12*C12 3.3 =D13*C13 0.6 =D14*C14 1 =D15*C15 =B4/B3 =B9/D3 =B8/B3 16 17 18 Z-score =SUM(E11:E16) =1.2X1+1.4X2+3.3X3+0.6X4+1.0X5