Any business where sales are seasonal can probably be made to look worse than they really are, in terms of Altman Z, by picking a certain balance sheet point. In the end any percentage chance of bankruptcy is all smoke and mirrors. PGW will either go broke or it won't. There is no "in between" end point.
However, I don't like the blowout in trade receivables at PGW (in comparison with the EOFY in June). Nevertheless I do note receivables are slightly less than the same time a year ago (but did that figure include outstanding payments on finance loans?).
I don't like the special dividend to help bail out Agria. Margins are looking thinner than ever, and the best way to improve profits at PGW is still to pay down debt. Unfortunately we may see debt begin to rise again at PGW this year. Of course from an Agria perspective the dividend was probably absolutely necessary or Agria may not survive.
While the cash flow at half year has been OK, I would say the underlying cashflow at PGW is not in a good position. The big increase in accounts receivable combined with the decrease in inventory implies that PGW is selling stuff but their customers are not yet paying for it. Maybe this situation will correct itself at the end of year in June?
SNOOPY