The following table shows the key figures of Lehman Brothers Inc. in Millions 2006 2007 Retained earnings
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Question:
The following table shows the key figures of Lehman Brothers Inc.
in Millions | 2006 | 2007 |
Retained earnings | 15857 | 19698 |
EBIT | 5905 | 6013 |
book value of equity | 19191 | 22490 |
sales | 17583 | 19257 |
total assets | 503545 | 691063 |
current assets_total | 491801 | 677669 |
current liability_total | 403176 | 545423 |
the number of outstanding CS | 531 | 533 |
1. The stock prices at the end of the 2006 and 2007 period are $65 and $78 per share relatively. Please estimate the probability of bankruptcy at the end of 2006 and 2007 using the Altman Z score.
2. As an external auditor, you should evaluate the evidences indicating "substantial doubt" about firm's ability to continue as a going concern. What evidences should you look at? If you find the evidences, how can you add this opinion in 10-K?
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