Using a Modified Discriminant Function Similar to Altman's, Burger Bank

question 41

Multiple Choice

Using a modified discriminant function similar to Altman's, Burger Bank estimates the following coefficients for its portfolio of loans: Z = 1.4X₁ + 1.09X₂ + 1.5X₃

where X₁ = debt to asset ratio; X₂ = net income and X₃ = dividend payout ratio.
What is the Z-score if the debt to asset ratio is 40 percent, net income is 12 percent, and the dividend payout ratio is 60 percent?

• A)1.59.
• B)1.48.
• C)1.36.
• D)1.28.
• E)1.20.

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Definitions:

Activity-Based Costing

A pricing strategy that recognizes various tasks within a company and allocates the expenses of each task to all goods and services based on their real usage.

Customer Support

The range of services provided to assist customers in making cost-effective and correct use of a product, including assistance in planning, installation, training, troubleshooting, maintenance, and upgrading.

Time-Driven

Refers to processes or activities that are initiated, controlled, or measured based on time criteria.

Activity-Based Costing

An accounting methodology that assigns costs to products and services based on the resources they consume, providing more accurate cost information.