The following data are for the A, B, and C Companies:
|
Company |
|||
|
Variables |
A |
B |
C |
|
Current assets |
$150,000 |
$170,000 |
$180,000 |
|
Current liabilities |
$60,000 |
$50,000 |
$30,000 |
|
Total assets |
$300,000 |
$280,000 |
$250,000 |
|
Retained earnings |
$80,000 |
$90,000 |
$60,000 |
|
Earnings before interest and taxes |
$70,000 |
$60,000 |
$50,000 |
|
Market price per share |
$20.00 |
$18.75 |
$16.50 |
|
Number of shares outstanding |
9,000 |
9,000 |
9,000 |
|
Book value of total debt |
$30,000 |
$50,000 |
$80,000 |
|
Sales |
$430,000 |
$400,000 |
$200,000 |
Required
a. Compute the Z score for each company.
b. According to the Altman model, which of these firms is most likely to experience financial failure?