Credit Analysis of Fine Foods Limited

Course code: F-405

Submitted to
Prof. Khaleda Khatun
Professor
Department of Finance
University of Dhaka

Submitted by
Group:
Section: B, 23rd Batch
Department of Finance
University of Dhaka

Group Profile
Serial Name Id. Number Remarks
number
1 Md. Real Miah 23-008
2 Abdul Kader Raju 23-032
3 Sohana Alam Jouti 23-060
4 Mehrun Akter 23-090
5 Md. Samiul Islam 23-196

Date of submission: 15th March, 2020

Introduction
Altman’s Z score is developed based on five financial ratios to predict financial condition, the
probability of distress and credit rating of the company. In his study, z score greater than 2.99 is
considered as safe zone, a score between 1.81 and 2.99 is considered as gray zone and a score
less than 1.88 is considered as distressed zone. The five financial ratios and multiplier factors
considered are given below:
Category Ratio Multiplier Factor

A Working capital/ 1.2

Total Assets
B Retained Earnings/ 1.4
Total Assets
C EBIT/ 3.3
Total Assets
D MV of Stocks/ 0.6
BV of Debt
E Sales/ 1.0
Total Assets

Here we can see that the financial metrics considered are working capital, retained earnings,
EBIT, leverage and asset turnover.

Evaluation
In this section, we will evaluate the five ratios required to determine the z score for our selected
company Fine Foods Limited.
Category Ratio Multiplier Score
factor
A 0.4353 1.2 0.5223
B 0.0412 1.4 0.0577
C 0.0248 3.3 0.0819
D 95.3288 0.6 57.197
E 0.3341 1.0 0.3341
Z Score 58.1934

According to our credit analysis, our company Fine Foods Limited is at safe zone.

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Appendix

Current Assets 74,444,404

Current Liabilities 5,704,534 Areas Ratio factor score
Working Capital 68,739,870 A 0.4353 1.2 0.52234
Retained Earnings 6,511,925 B 0.041236 1.4 0.05773
EBIT 3,919,417 C 0.024819 3.3 0.081903
Market Value of Stocks 617,647,000 D 95.32884 0.6 57.1973
Sales 52,773,790 E 0.334181 1.0 0.334181
Total Assets 157,919,698 Z score 58.19346
Book Value of 6,479,120
Liabilities

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