1. Calculate the Altman Z-score for Ford and Toyota. Whatinferences do youdraw from thesevalues? Whatinferences do youdraw fromcomparing thevalues across thetwocompanies? (You mayassume that the market value of equity forFordandToyota, respectively as of their 2012 fiscal year ends, is $38 billion and $110 billion.)
2. What do you predict would happen ifFord’s auditors issued a going-concern audit opinion? How would suppliers react? How would debt holders react?
3. Why might an audit firm be hesitant to issue a going-concern opinion?
4. What would happen to an audit firm if it did NOT issue a going-concern opinion and the company goes bankrupt in the following year?