The following is ABC Inc.’s balance sheet (in thousands): Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equals $22. The beginning retained earnings is $0, the market value of equity is equal to its book value, and the company pays no dividends. Calculate Altman’s Z score for ABC, Inc. if ABC has a 50 percent dividend payout ratio and the market value of equity is equal to its book value. Recall the following: Net working capital = Current assets − Current liabilities Current assets = Cash + Accounts receivable + Inve ntories Current liabilities = Accounts payable + Accruals + Notes payable
The following is ABC Inc.’s balance sheet (in thousands): Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equals $22. The beginning retained earnings is $0, the market value of equity is equal to its book value, and the company pays no dividends. Calculate Altman’s Z score for ABC, Inc. if ABC has a 50 percent dividend payout ratio and the market value of equity is equal to its book value. Recall the following: Net working capital = Current assets − Current liabilities Current assets = Cash + Accounts receivable + Inve ntories Current liabilities = Accounts payable + Accruals + Notes payable
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The following is ABC Inc.’s balance sheet (in thousands):
Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equals $22. The beginning
-
Calculate Altman’s Z score for ABC, Inc. if ABC has a 50 percent dividend payout ratio and the market value of equity is equal to its book value. Recall the following:
Net working capital
=
Current assets − Current liabilities
Current assets
=
Cash + Accounts receivable + Inve ntories
Current liabilities
=
Accounts payable + Accruals + Notes payable
Transcribed Image Text:Assets
Liabilities and Equity
$ 20
$ 30
Accounts payable
Notes payable
Accruals
Cash
Accounts receivable
90
90
Inventory
90
30
Long-term debt
Equity
150
Plant and equipment
500
400
Total
$700
Total
$700
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