The CEO of Sizwe Aviation Services approached your bank for a credit facility. The following are ratios
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Question:
The CEO of Sizwe Aviation Services approached your bank for a credit facility. The following are ratios for Sizwe Aviation Services for the 2016 financial year.
• Working capital to total asset ratio = 12%
• Retained earnings to total asset ratio = 25%
• Profit before interest and tax to total assets = 17%
• Market value of equity to book value of debt = 110%
• Sales to total assets = 120%
Based on the Altman’s Z-score, calculate the risk of bankruptcy for Sizwe Aviation Services. Briefly comment on the credit decision you make based on the calculated Z-score.
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger
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