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:

Invisible Hand

A term coined by Adam Smith to describe the unintended social benefits resulting from individual actions.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the point where the supply and demand curves intersect, representing market balance.

Equilibrium Quantity

The amount of products or services available that meets the demand at the price where market equilibrium is achieved.