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An AA-rated, one-year C&I loan from a firm with the following financial statement information (in millions...

  1. An AA-rated, one-year C&I loan from a firm with the following financial statement information (in millions of dollars):  

Assets

Liabilities and Equity

Cash

40

Accounts payable

55

Accounts receivables

120

Notes payable

60

Inventory

210

Accruals

70

Long Term debt

550

Plant and equipment

1,100

Equity (ret. Earnings = $200)

735

TOTAL ASSETS

1,470

TOTAL Liabilities and Equity

1,470

Also assume sales = $1,250 m, cost of goods sold = $930 m, and the market value of equity is equal to 2.2 times the book value. MC Bancorp uses the Altman’s Z score model to evaluate AA-rated loans.

Z Score =

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Expert Solution

jeff jeffy answered 2 years ago
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