Belta manufacturers in China produce car engines. They have been in the business for almost 20 years. They have been profitable enough to employ more staff and increase their production. But with a recent loan taken to facilitate automation, investors want to know how the company is doing. Their total assets are worth K3, 500,000 while they have current assets of K9, 200,000. Their current liabilities stand at K5, 000,000 while retained earnings amount to K800, 000. Earnings before Interest and Tax come to K6, 500,000. Sales total K8, 300,000 while the market value of equity is K7, 000,000.The company has 1,000,000 equity shares outstanding with par value of K5.These shares are now selling at K7 per share. Calculate the Altman z-score for the company and advise. (b)The risk incurred by a bank when the maturities of its assets and liabilities are mismatched is called interest rate risk. (i) Describe two types of interest rate risks (ii) Describe any three methods used to measure exposure to interest rates
QUESTION FOUR
(a)Belta manufacturers in China produce car engines. They have been in the business for almost 20 years. They have been profitable enough to employ more staff and increase their production. But with a recent loan taken to facilitate automation, investors want to know how the company is doing. Their total assets are worth K3, 500,000 while they have current assets of K9, 200,000. Their current liabilities stand at K5, 000,000 while
Calculate the Altman z-score for the company and advise.
(b)The risk incurred by a bank when the maturities of its assets and liabilities are mismatched is called interest rate risk.
(i) Describe two types of interest rate risks
(ii) Describe any three methods used to measure exposure to interest rates
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