CONNECT 1 SEMESTER ACCESS CARD FOR CORPORATE FINANCE
11th Edition
ISBN: 9781259298738
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 30, Problem 3QP
Z-Score 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 | $95,000 |
| EBIT | 7,300 |
| Net working capital | 3,800 |
| Book value of equity | 21 ,000 |
| 19,600 | |
| Sales | 104,000 |
The stock price of FMM is $27 per share and there are 7,500 shares outstanding. What is the Z-score for this company?
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Balance Sheet
December 31
December 31
Income Statement
For the year ended Dec 31, 2021
2020
2021
Assets
Sales (100% credit)
1,330
Cash
305
270
Less: Cost of goods sold
760
Accounts receivable
275
290
Gross profit
570
Inventory
600
580
Operating expenses
30
Current assets
1,180
1,140
Depreciation
200
Plant and equipment
1,700
1,940
Net operating income
340
Less: acc depr
-500
-600
Less: Interest expense
57
Net plant and equipment
1,200
1,340
Net income before taxes
283
Total assets
2,380
2,480
Less: Taxes
96
Net income
187
Liab. and Owners' Equity
Accounts payable
150
200
Notes payable
125
-
Current liabilities
275
200
Bonds payable
500
500…
Jon Fulkerson a credit analyst at the True Credit bank, has received a credit application from Seether LLC, a private company. An abbreviation portion of the financial information provided by the company is shown below:
Total Assets:$78000 EBIT:$8600 Net Working Capital:$3900
Book value of total equity:$23000 Accumulated retained earnings:$15000
Total Liabilities:$5500
What is the z-score for this company?
2. Which is the following statement about firms will have the most control over the selling price of its produce?
A.Customized wine producer B. A low-end mobile phone producer
C.A small-scale petrol station outlet D.A retail outlet E. A grape grower
Chapter 30 Solutions
CONNECT 1 SEMESTER ACCESS CARD FOR CORPORATE FINANCE
Ch. 30 - Prob. 1CQCh. 30 - Prob. 2CQCh. 30 - Prepackaged Bankruptcy What is prepackaged...Ch. 30 - Prob. 4CQCh. 30 - Prob. 5CQCh. 30 - APR What is the absolute priority rule?Ch. 30 - DIP Loans What are DIP loans? Where do DIP loans...Ch. 30 - Bankruptcy Ethics Firms sometimes use the threat...Ch. 30 - Bankruptcy Ethics Several firms have entered...Ch. 30 - Bankruptcy versus Private Workouts Why do so many...
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