Question: Question Two a) Explain five causes of business failures (5 marks) b) The following financial data were extracted from the books of two companies that

Question Two a) Explain five causes of business failures (5 marks) b) The following financial data were extracted from the books of two companies that operate in the same business sector Kericho Dairy limited (sh000) Kabianga Dairy limited (sh000) Working capital 10,500 (1,600) Total assets 50,000 21,000 Total liabilities 22,000 13,000 Market value of equity 38,000 5,100 Retained earnings 19,000 3,000 sales 86,000 23,000 Earnings before interest and taxes 12,000 1,300 Required: I. Use the Altmans (1968) model for predicting bankruptcy to calculate the Z score for each company (15 marks) II. Which company is likely to go into bankruptcy? Why? (5 marks) (Total 25 Marks)

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