Calculation of Altman's Z-Score: Suppose That the Financial Ratios of a Potential

question 26

Multiple Choice

Calculation of Altman's Z-Score: Suppose that the financial ratios of a potential borrowing firm took the following values: X₁ = Net working capital/Total assets = .35, X₂ = Retained earnings/Total assets = .50, X₃ = Earnings before interest and taxes/Total assets = .60, X₄ = Market value of equity/Book value of long-term debt = 1.50, X₅ = Sales/Total assets ratio = 3.65. Calculate the Altman's Z-score for this firm.

• A) 7.65
• B) 1.54
• C) 6.60
• D) 1.32

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Definitions:

Error-Checking Function

The process within a system designed to detect and correct mistakes or inconsistencies to ensure accuracy and reliability.

Motivation

The driving force behind individuals' actions, desires, and needs, prompting them towards goal-oriented behavior.

Need Theories

Psychological theories that focus on the inherent human needs driving behavior and motivation.

Process Theories

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