1. Pick a company that recently declared bankruptcy—examples include Sears, Blockbuster, Borders, Payless Shoe Source, Barneys New York, KMart, Gymboree, Toys R Us or any other company you and the professor finds acceptable.
2. Find on the SEC website or other acceptable source the last 10-K filed by your selected company. Send your professor a note with the name of the Company and the last full year (say what year) of $ sales, $ net income and $ Assets are from the 10-K. Also tell me the number of pages in the 10-K. The professor will acknowledge and agree to your choice. This must be completed no later than May 11.
3. Research what were the business reasons causing bankruptcy (things like over leverage, risky assets, bad business strategy, illiquidity, etc. ) List these. For each of the reasons you give (must have at least 4 reasons) show at least one ratio or percentage change that illustrates this. You may “cut and paste” relevant sections of the 10-K that illustrate your point.
4. Calculate the Altman Z Score as of the last financial statement date and associated probability of bankruptcy. Comment on how predictive the Altman Z score was in identifying the area(s) of difficulty of the company you have selected.