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    6852397

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    The document provides financial information for Seether, LLC, including total assets of $75,000, EBIT of $8,300, and other details. It asks for the Z-score of the company. The solution shows calculating the Z-score involves dividing various financial metrics like retained earnings and EBIT by total assets to get weighting factors T1-T4, then summing the results.

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    6852397

    Uploaded by

    kc103038
    255 views1 page
    The document provides financial information for Seether, LLC, including total assets of $75,000, EBIT of $8,300, and other details. It asks for the Z-score of the company. The solution shows calculating the Z-score involves dividing various financial metrics like retained earnings and EBIT by total assets to get weighting factors T1-T4, then summing the results.

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    The document provides financial information for Seether, LLC, including total assets of $75,000, EBIT of $8,300, and other details. It asks for the Z-score of the company. The solution shows calculating the Z-score involves dividing various financial metrics like retained earnings and EBIT by total assets to get weighting factors T1-T4, then summing the results.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    255 views1 page

    6852397

    Uploaded by

    kc103038
    The document provides financial information for Seether, LLC, including total assets of $75,000, EBIT of $8,300, and other details. It asks for the Z-score of the company. The solution shows calculating the Z-score involves dividing various financial metrics like retained earnings and EBIT by total assets to get weighting factors T1-T4, then summing the results.

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    © All Rights Reserved
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    4.

    Z-Score

    Jon fulkerson has also 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 75,000


    EBIT 8,300
    Net working capital 6,800
    Book value of equity 26,000
    Accumulated retained earnings 19,000
    Total liabilities 49,000

    What is the Z score for this company?

    Solution:

    The Z-score for private company is

    T1 = (Current Assets-Current Liabilities) / Total Assets

    = 6,800/75,000

    = 0.091

    T2 = Retained Earnings / Total Assets

    = 19,000/75,000

    = 0.253

    T3 = Earnings before Interest and Taxes / Total Assets

    = 8,300/75,000

    = 0.111

    T4 = Book Value of Equity / Total Liabilities

    = 26,000/49,000

    = 0.531

    Therefore,

    Z = 0.091T1 + 0.253T2 + 0.111T3 + 0.531T4

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