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

question 25

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 = 0.35,X₂ = Retained earnings/Total assets = 0.50,X₃ = Earnings before interest and taxes/Total assets = 0.60,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:

Leader Punishment Behaviour

The leader’s use of reprimands or unfavorable task assignments and the active withholding of rewards.

Social-Emotional

Relating to the complex interplay of emotional and social aspects of one's experience and behavior.

Position Power

The authority and influence someone has in an organization due to the position they hold, rather than personal attributes.

Fiedler

A reference to Fiedler's Contingency Theory, proposing that effective leadership is determined by the match between a leader's style of interacting with subordinates and the degree to which the situation gives control to the leader.