The following is ABC Inc.’s balance sheet (in thousands): Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equals $22. The beginning...

The following is ABC Inc.’s balance sheet (in thousands):

Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equals $22. The beginning retained earnings is $0, the market value of equity is equal to its book value, and the company pays no dividends.

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   Calculate Altman’sZ score for ABC, Inc. if ABC has a 50 percent dividend payout ratio and the market value of equity is equal to its book value. Recall the following:

   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   
   

   Net working capital	=	Current assets − Current liabilities
   Current assets	=	Cash + Accounts receivable + Inve ntories
   Current liabilities	=	Accounts payable + Accruals + Notes payable

   
   

Extracted text: Assets Liabilities and Equity $ 20 $ 30 Accounts payable Notes payable Accruals Cash Accounts receivable 90 90 Inventory 90 30 Long-term debt Equity 150 Plant and equipment 500 400 Total $700 Total $700