Compute Altman Z-score for Tribune Company

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Reference no: EM132825735

Problem - Given - Select Financial Data for The Tribune Company and The Washington Post Company (amounts in millions, except per-share amounts)

 

Tribune

Washington Post

 

2007

2006

2007

2006

Sales

$5,063

$5,444

$4,180

$3,905

Net income (loss) before interest and taxes

$619

$1,085

$505

$544

Net income (loss)

$87

$594

$289

$324

Current assets

$1,385

$1,346

$995

$935

Total assets

$13,150

$13,401

$6,005

$5,381

Current liabilities

$2,190

$2,549

$1,013

$812

Total liabilities

$16,664

$9,081

$2,543

$2,222

Retained earnings (deficit)

$(3,474)

$3,138

$4,330

$4,120

Common shares outstanding

239

307

10

10

Market price per share

$45.04

$58.69

$759.25

$711.53

Source - The Tribune Company, Form 10-K for the Fiscal Year Ended December 30, 2007, and The Washington Post Company, Form 10-K for the Fiscal Year Ended December 30, 2007.

Required -

1. Compute Altman's Z-score for Tribune Company and Washington Post for fiscal 2006 and 2007.

2. How did the bankruptcy risk of Tribune Company change between fiscal 2006 and 2007? Explain.

3. How did the bankruptcy risk of Washington Post change between fiscal 2006 and 2007? Explain.

4. The Tribune Company filed Chapter 7 bankruptcy in December 2008. Using the analysis from Requirements b and c, would you have predicted The Tribune Company or The Washington Post Company to file bankruptcy? Explain.

Reference no: EM132825735

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