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Q2. MNO Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Cash Accounts receivables Inventory Plant and equipment Total assets A1 $500.000 $ 20 90 90 500 $700 Liabilities and Equity Accounts payable Notes payable Accruals Long-term debt Equity (ret. earnings = $22) Total liabilities and equity 11 $260.000 $ 30 90 30 150 400 $700

Q2. MNO Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Cash Accounts receivables Inventory Plant and equipment Total assets A1 $500.000 $ 20 90 90 500 $700 Liabilities and Equity Accounts payable Notes payable Accruals Long-term debt Equity (ret. earnings = $22) Total liabilities and equity 11 $260.000 $ 30 90 30 150 400 $700

Essentials Of Investments
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
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Q2. MNO Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Cash Accounts receivables Inventory Plant and equipment Total assets $ 20 90 90 Recall that: 500 $700 Liabilities and Equity Accounts payable Notes payable Accruals Long-term debt Equity (ret. earnings = $22) Total liabilities and equity Also assume sales = $500,000; cost of goods sold = $360,000; and the market value of equity is equal to the book value. a. What is the Altman discriminant function value for MNO Inc.? Net working capital = Current assets - Current liabilities. Current assets = Cash + Accounts receivable + Inventories. $ 30 90 30 150 Current liabilities = Accounts payable + Accruals + Notes payable. EBIT = Revenues - Cost of goods sold. 400 $700 Altman's discriminant function is given by: Z = 1.2X1 + 1.4X2+3.3X3 +0.6X4+ 1.0X5 All numbers are in $000s. b.Based on the Altman's Z-score only, should you approve MNO Inc.'s application to your bank for a $500,000 capital expansion loan?
Transcribed Image Text:Q2. MNO Inc., a publicly traded manufacturing firm in the United States, has provided the following financial information in its application for a loan. All numbers are in thousands of dollars. Assets Cash Accounts receivables Inventory Plant and equipment Total assets $ 20 90 90 Recall that: 500 $700 Liabilities and Equity Accounts payable Notes payable Accruals Long-term debt Equity (ret. earnings = $22) Total liabilities and equity Also assume sales = $500,000; cost of goods sold = $360,000; and the market value of equity is equal to the book value. a. What is the Altman discriminant function value for MNO Inc.? Net working capital = Current assets - Current liabilities. Current assets = Cash + Accounts receivable + Inventories. $ 30 90 30 150 Current liabilities = Accounts payable + Accruals + Notes payable. EBIT = Revenues - Cost of goods sold. 400 $700 Altman's discriminant function is given by: Z = 1.2X1 + 1.4X2+3.3X3 +0.6X4+ 1.0X5 All numbers are in $000s. b.Based on the Altman's Z-score only, should you approve MNO Inc.'s application to your bank for a $500,000 capital expansion loan?
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