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?

Answer rating: 100% (QA)

1 To calculate Altman Zscore 2006 Z1 Working CapitalTotal Assets Current Assets Current LiabilitiesT... View the full answer