Sears: A Struggle For Survival Case Study Analysis
From the above table, it could be said that sears is in the red zone of getting bankrupt with all its z-score values below 3 and near 1.8. The major reason for Sears bankruptcy is its negative operating income and retained earnings that bring liquidity problems and force the firm to sale its assets to continue operations.
Moreover, Altman z-scores of sears on the basis of projected data is calculated that is -05 as compared to 4.8 of Walmart and 3.1 of Macy in 2017. This implies that Sears is highly incompetents in the market.(Brigham, 2016) (See Appendix 2)
Recommended Plan of Action
On the basis of above analysis, Sears is recommended to take excessive cost cutting measures with strict policies if it aims to continue operating. Moreover, the firm must adopt percentage of total assets retained earnings policy to avoid liquidity issues and sale of assets that bring excess amount of capital losses. However, the worst financial situation with Altman Z score pointing towards bankruptcy in near future shows that despite of strict measures to revive its financial performance, the firm may be unable to improvise its financial performance at required levels that will ultimately bring it back to the bankruptcy.................................
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