Equity Research Assignment
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15.535 Assignment 1 Han,Xinli
Question 1:
= -8.118
= -0.044+(-25.74)+(-2.63)+1.46
= -26.95
According to the scoring criteria for Z-score and Z”-score, Cosi score has been well below 1.8, which indicates that it has a high probability of bankruptcy. Cosi’s negative EBIT figure and its negative retained earnings have contributed towards the results.
Question 2:
In my opinion, I think there are several factor that contributes to this happening.
Net Working Capital: Firstly, Cosi’s net working capital in 2002 is still positive compare to that of 2015. A positive net working capital indicates that the business has a certain degree of short-term liquidity and that the short-term funds available from its current assets are sufficient to cover