The following statements relates to Shida LTD for the period ended 30thSeptember, 2011. Statement of Financial Position
Question:
The following statements relates to Shida LTD for the period ended 30thSeptember, 2011.
Statement of Financial Position for year ending 30thSeptember, 2011
Non-current Assets shs‘000’ shs‘000’
Land 1000
Plant 5,000
Equipment 8,000 14,000
Current Assets
Inventories/stock 4,000
Accounts receivable/debtors 3,000
Cash 400 7400
Total assets 21,400
Capital and liabilities
Preference share capital 1,000
Ordinary share capital 1,000
Paid in capital in excess 2,000
Retained earnings 1,400 5,400
Non-Current liabilities
Mortgage 4,000
Debentures 6,000 10,000
Current liabilities
Accounts payable 5,000
Notes payable 1,000 6,000
21,400
Income Statement ‘shs000’
Sales 6,000
Cost of sales (3,500)
Selling and administration expenses (1,000)
EBIT 1,500
Interest (1,100)
EBT 400
Tax 30% 120
PAT/EAT 280
Required
a)Predict the company’s failure using Altman's Z-Score and interpret its meaning
(b)Explain FIVE options in dealing with financial distress in the corporate sector
Expert Answer:
Solution Shida LTD financial statement for period ended 30th September 2011 is given and with the he... View the full answer
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
