Highlights
Context
You are a financial accountant for an Australian manufacturer called “OzMade”. Recently the entire accounting and finance department attended a workshop on Data Analytics in Accounting. Your manager is excited about employing the new skills and knowledge gained from the workshop and sends you the following email:
Hi [Your Name],
As you know, the board of directors have been interested in establishing a presence in the North American market for a while. Obviously COVID has hampered all these plans but they’re optimistic that the world will return to normal (whatever that looks like) by next year. In preparation for this they’re requested that I assist them in deciding on which state in America we should open our first shop when things return to “normal”. So remember that exercise we did at the data analytics workshop? The one where we had to calculate Altman’s Z to determine the risk of bankruptcy. Well, I did some further research and found there’s many bankruptcy prediction models. I’m quite interested in this model called Ohlson’s O-Score. I’ve attached a word document explaining the model and how to calculate it. There’s also an excel template that you could use to check the formulas for the model.
I’d like you to calculate the Ohlson’s O-Score for the following companies in the attached excel file. I got the new graduate to extract the data of US manufacturing companies for the years 2019 and 2020. I’ll only require you to calculate the O-Score for 2020 but to do that you’ll need 2019 data as well. I’m not sure if the data is accurate but even if it isn’t at least you can develop a template that we could use to calculate the O-Score.
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