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

question 87

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 = 0.30,X₂ = Retained earnings/Total assets = 0.40,X₃ = Earnings before interest and taxes/Total assets = 0.43,X₄ = Market value of equity/Book value of long-term debt = 0.65,X₅ = Sales/Total assets ratio = 0.95.Calculate the Altman's Z-score for this firm.

• A)3.679
• B)2.73
• C)10.23
• D)2.046

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