solution

In the 1980s, Z-scores provided by Datastream suggested that the following companies (amongst others) were in decline:

â–  Rover Group (then British Leyland)

â–  British Aluminium

â–  Renold (chainmakers)

â–  Acrow (cranemakers)

â–  Dunlop

â–  Lucas

â–  Tube Investments.

The companies listed below are considered vulnerable to acquisition or even failure which might happen because their share price is low in comparison with the book value of their assets (House of Fraser and Debenhams) or because of the level of their debts (Vodafone and Eurotunnel).

â–  House of Fraser

â–  Debenhams (Minicase 14.8)

â–  Vodafone

â–  Eurotunnel.

Look up the financial data on these companies, and based on your findings, decide how valuable you believe the Z-score might be.

You will realize that several of these organizations are used as examples in different parts of the book.