Newly Corporation Consolidated Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2008 Dec. 31, 2007 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net $ 369 $ 427 58 76 Inventories 489 481 Prepaid expenses and other current assets Deferred income taxes, net 107 226 43 40 Total current assets 1,066 Property, plant and equipment, net Other assets 1,250 3,287 1,661 5,137 1,168 TOTAL ASSETS 7,371 2$ 6,198 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes Current portion of long-term debt $ 429 $ 242 104 98 132 141 89 82 Total current liabilities 754 563 Long-term debt 2,630 2,630 Total liabilities 3,384 3,192 Shareholders' equity: Common stock ($0.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings 350 350 2,415 1,222 2,415 241 Total shareholders' equity 3,987 3,006 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2$ 7,371 $ 6,198 Assume the following information for both years: Net Profit Margin (NPM) was 4%. Interest on Long-term Debt 10% Times-Interest-earned was 5x All of the Net Income was retained and Market price for each share of common stock was as follows: January 1, 2008 - $1.25; December 31, 2008 - $1.14; January 1, 2007- $1.10; December 31, 2007 - $0.86 a. Use Altman Z-Score (for 2 years) to decide whether or not you would lend four million dollars to the above-mentioned company. Show all calculations supporting your conclusion.
Newly Corporation Consolidated Balance Sheet (in thousands except share data) Fiscal Year Ended Dec. 31, 2008 Dec. 31, 2007 ASSETS Current assets: Cash and cash equivalents Accounts receivable, net $ 369 $ 427 58 76 Inventories 489 481 Prepaid expenses and other current assets Deferred income taxes, net 107 226 43 40 Total current assets 1,066 Property, plant and equipment, net Other assets 1,250 3,287 1,661 5,137 1,168 TOTAL ASSETS 7,371 2$ 6,198 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued compensation and related costs Accrued taxes Current portion of long-term debt $ 429 $ 242 104 98 132 141 89 82 Total current liabilities 754 563 Long-term debt 2,630 2,630 Total liabilities 3,384 3,192 Shareholders' equity: Common stock ($0.1 par value)-authorized, 4,000,000 shares; issued and outstanding, 3,500,000. Paid-in capital in excess of par Retained earnings 350 350 2,415 1,222 2,415 241 Total shareholders' equity 3,987 3,006 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2$ 7,371 $ 6,198 Assume the following information for both years: Net Profit Margin (NPM) was 4%. Interest on Long-term Debt 10% Times-Interest-earned was 5x All of the Net Income was retained and Market price for each share of common stock was as follows: January 1, 2008 - $1.25; December 31, 2008 - $1.14; January 1, 2007- $1.10; December 31, 2007 - $0.86 a. Use Altman Z-Score (for 2 years) to decide whether or not you would lend four million dollars to the above-mentioned company. Show all calculations supporting your conclusion.
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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Transcribed Image Text:Newly Corporation Consolidated Balance Sheet
(in thousands except share data)
Fiscal Year Ended
Dec. 31, 2008
Dec. 31, 2007
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
$
369
$
427
58
76
Inventories
489
481
Prepaid expenses and other current assets
Deferred income taxes, net
107
226
43
40
Total current assets
1,066
Property, plant and equipment, net
Other assets
1,250
3,287
1,661
5,137
1,168
TOTAL ASSETS
7,371
2$
6,198
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
Accrued compensation and related costs
Accrued taxes
Current portion of long-term debt
$
429
$
242
104
98
132
141
89
82
Total current liabilities
754
563
Long-term debt
2,630
2,630
Total liabilities
3,384
3,192
Shareholders' equity:
Common stock ($0.1 par value)-authorized,
4,000,000 shares; issued and outstanding, 3,500,000.
Paid-in capital in excess of par
Retained earnings
350
350
2,415
1,222
2,415
241
Total shareholders' equity
3,987
3,006
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
2$
7,371
$
6,198
Assume the following information for both years:
Net Profit Margin (NPM) was 4%.
Interest on Long-term Debt 10%
Times-Interest-earned was 5x
All of the Net Income was retained and
Market price for each share of common stock was as follows: January 1, 2008 - $1.25;
December 31, 2008 - $1.14; January 1, 2007- $1.10; December 31, 2007 - $0.86
a. Use Altman Z-Score (for 2 years) to decide whether or not you would lend four million dollars
to the above-mentioned company. Show all calculations supporting your conclusion.
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