What Is the Most Important Factor Determining Bankruptcy, According to the Altman

question 110

Multiple Choice

What is the most important factor determining bankruptcy, according to the Altman Z-score model?

• A)Working capital to assets ratio.
• B)Retained earnings to assets ratio.
• C)Earnings before interest and taxes to assets ratio.
• D)Market value of equity to book value of long-term debt ratio.
• E)Sales to assets ratio.

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Definitions:

Functional Currency

The main currency used by a business or unit in its day-to-day operations.

Exchange Rate

The price at which one currency can be exchanged for another, often fluctuating based on market conditions.

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and equity of a parent company and its subsidiaries into one document.

Acquisition Consideration

The total value transferred by a company to acquire another company, which may include cash, assets, or stock.