Which of the Following Financial Ratios Is Not Used to Develop

question 40

Multiple Choice

Which of the following financial ratios is not used to develop Altman's Z score from multiple discriminate analysis?

• A)Market value of equity/book debt
• B)EBIT/total assets
• C)Interest expense/total assets
• D)Working capital/total assets

---

Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, representing the core profitability of a company's products or services before deducting operating expenses.

Inventory Included

This refers to all items of merchandise, raw materials, work-in-progress, and finished goods that a company holds for the purpose of sale or production.

Periodic Inventory System

An inventory system where the inventory count is physically conducted at specific intervals to determine the ending inventory balance and cost of goods sold.

Perpetual Inventory System

An inventory management method that continuously tracks inventory levels and updates after every transaction.