Question

Jon Fulkerson, a credit analyst at the True Credit bank, has received a credit application from Seether, LLC, a private company. An abbreviated portion of the financial information provided by the company is shown below:

  

Total assets	$72,000
EBIT	8,800
Net working capital	5,100
Book value of equity	27,000
Accumulated retained earnings	16,900
Total liabilities	66,000

   

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

0.0708 Z Score = Z = 6.56 X1 +3.26 X2 +1.05 X3 + 6.72 X4 X1 Net working Capital / Total Assets - 5100 / 72000 = X2 Accumulated retained earings / Total Assets - 16900/72000 = X3 EBIT / Total Assets = 8800 / 72000 = X4 Book value of equity / Total Liabilities = 27000/72000 = 0.2347 0.1222 0.3750 Z Score = 6.56*0.0708 +3.26*0.2347 +1.05*0.1222 +6.72*0.3750 = 3.877

Please give positive vote , let me know if you need any further information regarding the question