Applying the updated z-score method described in ?
Applying the updated z-score method described in ?How We May Predict Bankruptcy? by Sauer (second page of article), calculate the z-scores for the following companies and decide if the firm should grant trade credit to each of these companies. Use the excel spreadsheet to complete your assignment.
$ Millions
Company A
Company B
Working Capital (WC)
16,932
5,109
Total Assets (TA)
235,968
150,269
Retained Earnings (RE)
72,655
15,392
Earnings before interest and taxes (EBIT)
26,234
3,270
Net Worth (NW)
102,113
9,994
Total Liabilities (TL)
133,855
140,257