個案資料

On January 20, 2017, Moody’s Investors Service, an American credit rating agency, downgraded the Corporate Family Rating for Sears Holdings Corporation from Caa1 to Caa2, stating that the company did not have enough money to stay in business and was relying on outside funding or sale of assets to sustain operations. The leading US retail chain had a revenue turnover of US$22.14 billion in Fiscal Year (FY) 2016–17. However, beginning in FY 2011–12, it had suffered losses year after year. Its stock had fallen 38 per cent between April 2016 and April 2017. The retail chain’s majority shareholder, chair, and chief executive officer was making some changes, but critics questioned his motives and retail acumen. With falling share prices, continuous losses, decreasing assets, and a decided shift in the industry away from traditional retail, it seemed that it would be only a matter of time before Sears Holdings Corporation reached its end. In light of its poor financial performance and consecutive losses on a yearly basis, a new Master of Business Administration graduate and junior analyst was assigned the task of analyzing the retail chain’s financial status and assessing the possibility of its bankruptcy.

The case is suitable for an undergraduate- or graduate-level course on accounting. Students should have a basic knowledge and understanding of accounting concepts. After completion of this case, students will be able to<ul><li>understand trends in the U.S. retail industry;</li><li>identify the challenges faced by Sears Holdings Corporation;</li><li>evaluate the financial health of the company using financial assessment tools and techniques, including financial ratio analysis;</li><li>identify the best course of action to salvage Sears Holdings Corporation’s financial performance; and</li><li>apply the Altman Z-score model to assess the likelihood of Sears Holdings Corporation’s bankruptcy.</li></ul>

• US retail industry, financial health, Altman Z-Score, bankrupt, financial ratio analysis