问答题 Culam Mining (Culam) is a mineral ore mining business in the country of Teeland. It owns and operates four mines. A mine takes on average two years to develop before it can produce ore and the revenue from the mine is split (25:75) between selling the ore under fixed price contracts over five years and selling on the spot market. The bulk of the business’s production is exported. A mine has an average working life of about 20 years before all the profitable ore is extracted. It then takes a year to decommission the site and return the land to a useable form for agriculture or other developments. Recently, one of Culam’s foreign competitors surprised the market by becoming insolvent as a result of paying too much to acquire a competitor when the selling price of their minerals dipped as the world economy went into recession. As a result, the chief executive officer (CEO) wanted to know if this was likely to happen to Culam. She had read about the Altman Z-score as a way of predicting corporate failure and had a business analyst prepare a report calculating the Z-score for Culam. The report is summarised below:

问答题 (a) Evaluate both the result of the analyst’s calculations and the appropriateness of these two models for Culam.(10 marks)

问答题 (b) Explain the potential effects of a mine’s lifecycle on Culam’s Z-score and the company’s probability of failure. Note: You should ignore its effect on the Q-score.(7 marks)

问答题 (c) Give four detailed recommendations to reduce the probability of failure of Culam, providing suitablejustifications for your advice.(8 marks)