Hi,

I need help with home work with Financial Statement Analysis

We will use the Z-score to do the analysis. Please instructions as follows: [1] Please search exiting company that you interested. [2] Please apply the Z-score (Bankruptcy risk) that we discussed last week on chapter 5, to analysis a company possibility to go to bankruptcy on first page. [3] Please provide a full page as report to explanation your analysis. The report should include [a] the result of your analysis; [b] reason will able to file bankruptcy; [c] your solution to help a company to prevent this risk (how to turn a company from bankruptcy to good, and good to be stable / excellent). [4] Please provide a reference and link along with your project. [5] In order to earn the maximum points, please follow all instructions to prepare your project. Barnes & Noble (BKS) Financial distress probability: 12.05% Total assets: $4.1 billion Founded: 1873 Barnes and Noble saw a drop in its stock earlier this month when the company lowered guidance and announced that the company is considering spinning out the Nook business. The simple reason why Barnes and Noble made it while Borders went belly up is the company's investment in Nook and online sales. But can Nook compete with Amazon's Kindle? Financial distress probability was calculated by GovernanceMetrics International. Barnes & Noble Inc (NYSE:BKS) Altman Z-Score 2.51 (As of Today) Barnes & Noble Inc has a Z-score of 2.51, indicating it is in Grey Zones. This implies that Barnes & Noble Inc is in some kind of financial stress. If it is below 1.81, the company may faces bankrupcy risk. The zones of discrimination were as such: When Z-Score is less than 1.81, it is in Distress Zones. When Z-Score is greater than 2.99, it is in Safe Zones. When Z-Score is between 1.81 and 2.99, it is in Grey Zones. BKS' s Altman Z-Score Range Over the Past 10 Years Min: 1.7 Max: 3.1 Current: 2.51 1.7 3.1 During the past 13 years, Barnes & Noble Inc's highest Altman Z-Score was 3.10. The lowest was 1.70. And the median was 2.38. The management should aim at reducing financial risk exposures on every component in Atamans' Z score. The gray area is an indicator of financial stress and therefore, several methods should be utilized. Firstly, the company should reduce liquidity risk exposure, This is the chance that Barnes $ Noble incorporation won't be able to convert assets quickly if need to honor short financial obligations as they arise. This type of risk can be mitigated by: a) Diversification. This strategy will help the company to avoid liquidity risks without even taking any special step. It is solely managements' decision on which investments are reserved for short term and long term respectively. The company should have more liquid assets to reduce this risk. b) Understanding time horizon. The strategic management team should know the time periods when more cash is needed either to settle debts or to increase stock for sales. c) Minimizing debts. The company should only borrow what is needed to finance particular project and ensure payoff from the project will cover for the financial cost. It is advisable to borrow for short term projects and finance long term projects using equity funds. Secondly, the company should take measures to counter market risks. This can be done through hedging against the risk. It is a fact of life that stock prices and interest rates fluctuate, to take a position against this, the strategic team needs to hedge. Past studies show market economies experience 20% bear drops every 3-4 years. For the company to stay in cash, firstly, it should dispose of any investments held which are not profitable in the future. Second strategy is tactical diversification and hedging. Here, the company should exercise defensive protection. It means protecting profits from decline, increasing net sales to total assets ratio thereof. Acquiring inverse equities puts the company in position of gaining when market goes down. Multiple put and call strategies are also important tools in trading option hedge methods. Put option gives the company the right to sell their stake in future while call option gives right to buy. Forwards and futures markets are also avenues which Barnes & Noble can use to reduce currency translation risk exposure. Here, the parties agree on transaction rate to be exercised in future today. In case the transaction rates rises, the company will be able to use the fixed rate agreed upon. Credit risk exposure should be reduced by ensuring that the type of financing subjects the company to the minimum interest rate obligations in the market as possible. Risk of stiff competition from fellow market players should be analyzed by strategic management team. Game theory strategies not utilized should be put in use to increase overall profitability. The management should aim at reducing financial risk exposures on every component in Atamans' Z score. The gray area is an indicator of financial stress and therefore, several methods should be utilized. Firstly, the company should reduce liquidity risk exposure, This is the chance that Barnes $ Noble incorporation won't be able to convert assets quickly if need to honor short financial obligations as they arise. This type of risk can be mitigated by: a) Diversification. This strategy will help the company to avoid liquidity risks without even taking any special step. It is solely managements' decision on which investments are reserved for short term and long term respectively. The company should have more liquid assets to reduce this risk. b) Understanding time horizon. The strategic management team should know the time periods when more cash is needed either to settle debts or to increase stock for sales. c) Minimizing debts. The company should only borrow what is needed to finance particular project and ensure payoff from the project will cover for the financial cost. It is advisable to borrow for short term projects and finance long term projects using equity funds. Secondly, the company should take measures to counter market risks. This can be done through hedging against the risk. It is a fact of life that stock prices and interest rates fluctuate, to take a position against this, the strategic team needs to hedge. Past studies show market economies experience 20% bear drops every 3-4 years. For the company to stay in cash, firstly, it should dispose of any investments held which are not profitable in the future. Second strategy is tactical diversification and hedging. Here, the company should exercise defensive protection. It means protecting profits from decline, increasing net sales to total assets ratio thereof. Acquiring inverse equities puts the company in position of gaining when market goes down. Multiple put and call strategies are also important tools in trading option hedge methods. Put option gives the company the right to sell their stake in future while call option gives right to buy. Forwards and futures markets are also avenues which Barnes & Noble can use to reduce currency translation risk exposure. Here, the parties agree on transaction rate to be exercised in future today. In case the transaction rates rises, the company will be able to use the fixed rate agreed upon. Credit risk exposure should be reduced by ensuring that the type of financing subjects the company to the minimum interest rate obligations in the market as possible. Risk of stiff competition from fellow market players should be analyzed by strategic management team. Game theory strategies not utilized should be put in use to increase overall profitability