Solution 07 24 2014 Page 1 Company Code Company Name Previous Name Sector Sub Sector Year Balance Date Months Annual Results ONE ONE TEL TELECOMMUNICATIONS
Solution Page Company Code Company Name Previous Name Sector Sub Sector Year Balance Date Months Annual
Solution Page Company Code Company Name Previous Name Sector Sub Sector Year
Company Name Previous Name Sector Sub Sector Year Balance Date Months Annual Results ONE ONE TEL TELECOMMUNICATIONS
Solution Page Company Code Company Name Previous Name Sector Sub
Sector Year Balance Date Months Annual Results ONE ONE TEL TELECOMMUNICATIONS
Solution Page Company Code Company Name Previous Name
Solution Page Company Code
(Solution) 07/24/2014 Page 1 Company Code Company Name Previous Name Sector Sub Sector Year Balance Date Months Annual Results ONE ONE.TEL TELECOMMUNICATIONS...

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Question Using the Excel spreadsheet (file), compute One.Tel’s Z score for each year. How predictive is the model of One.Tel’ eventual collapse? If the model was not very predictive, what variables in the model may have deceived the analyst? What are the limitations of Altman’s Z score? Assuming the same Z score model was a logit probability model, what would the probability of failure be07/24/2014 An ual Results Page 1 © Ian Huntley Pty Ltd 19 9-20 0. Al rights reserved. Company Code ONE Company Name ONE.TEL Previous Name Sector TELECOMMUNICATIONS Sub Sector Year 19 7A 19 8A 19 9A 20 0A Balance Date 30-Jun-97 30-Jun-98 30-Jun-9 30-Jun-0 Months 12 12 12 12 delisted 30 Aug 01 Trading Revenue $m 148.342 207.3 6 325.985 653.40 Reported EBIT 5.186 8.43 12.873 -265.70 Reported NPAT before Abnormals 3.723 5.910 7.861 -257.60 NPAT after Abnormals 3.723 5.910 6.965 -291.10 Reported NPAT After Abnormals 3.723 5.910 6.965 -291.10 Total Cur ent As ets 41.713 58.143 296.232 628.10 TOTAL ASSETS 50.742 78.19 525.967 1435.50 Total Cur ent Liabilities 39.265 43.430 84.859 375.20 Total Non-Cur ent Liabilities 12.380 6.608 78.078 1 5.50 TOTAL LIABILITIES 51.645 50.038 162.937 490.70 Reserves 0.854 26.30 0.0 0 1.20 Retained Earnings 1.485 5.102 9.075 -282.10 Outside Equity -3.250 -3.250 -5.315 0.0 0 Convertible Notes 0.0 0 0.0 0 3.646 0.0 0 TOTAL EQUITY -0.903 28.161 363.030 944.80 MARKET DATA: 30-Jun-97 30-Jun-98 30-Jun-9 30-Jun-0 Ordinary Share Price (end of yr) $ na $2.72 $1.01 $1.10 Market Capitalisation na 323.141 1743.689 28 0.7 8 Net Debt -2.783 -8.376 -102.512 -136.20 Enterprise Value na 314.765 1641.17 2744.578 Logit Probability Model: Z Score Model: 19 8 20 0 0.18 1482 0.176175 0.065243801 -0.19651689 0.1078403 -0.185092 6.45792078 5.870751783 2.6513894 0.45 1724 7.1964825 3.3026507 Prob = 1/(1 + exp(3.30) 0.035 Over10 0 Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 0.9 9X5. X1 = Working Capital / Total As ets. Measures liquid as ets in relation to the size of the company. X2 = Retained Earnings / Total As ets. Measures profitability that reflects the company's age and earning power. X3 = Earnings Before Interest and Taxes / Total As ets. Measures operating ef iciency apart from tax and leveraging factors. It recognizes operating earnings as being important to long-term viability. X4 = Market Value of Equity / Bo k Value of Total Liabilities. Ad s market dimension that can show up security price fluctuation as a pos ible red flag. X5 = Sales/ Total As ets. Standard measure for total as et turnover (varies greatly from industry to industry). 1 ( ) 1 a f a e ? ? ?

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