value: 15.00 points Fair-to-Midland Manufacturing, Inc., (FMM) has applied for a

Question

value: 15.00 points 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 EBIT Net working capital Book value of equity Accumulated retained earnings Sales $93,000 7,800 4,300 28,000 17,700 101,000 The stock price of FMM is $30 per share and there are 5,900 shares outstanding. What is the Z-score for this company? (Do not round intermediate calculations and round your answer to 3 decimal places 0.9-32-161.) Z-score References eBook & Resources Worksheet

Explanation / Answer

Z-score = 1.2*X1 +1.4*X2 + 3.3*X3 + 0.6*X4 + 0.999*X5

= 3.317

Working Capital 4,300 X1 0.046 Working Capital / Total Assets Retained Earnings 17,700 X2 0.190 Retained Earnings / Total Assets EBIT 7,800 X3 0.084 EBIT / Total Assets MV Equity 177,000 X4 2.723 MV Equity / Total Liabilities Net Sales 101,000 X5 1.086 Sales / Total Assets Total Assets 93,000 Z-Score 3.317 Total Liabilities 65,000

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