Consider the Following Data of a Prospective Borrower What Is This Company's Z-Score ?
A)2

question 9

Multiple Choice

Consider the following data of a prospective borrower. $$\begin{array} { | l | r | } \hline \text { Current assets } & \$ 120000 \\\hline \text { Current liabilities } & \$ 60000 \\\hline \text { Total assets } & \$ 500000 \\\hline \text { Market value of equity } & \$ 50000 \\\hline \text { Book value of equity } & \$ 60000 \\\hline \text { Retained earnings } & \$ 12000 \\\hline \text { Interest expense } & \$ 20000 \\\hline \text { Profit before tax } & \$ 200000 \\\hline \text { Sales revenue } & \$ 1000000 \\\hline\end{array}$$ What is this company's Z-score ?

• A)2.70
• B)2.80
• C)2.90
• D)3.00

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Definitions:

Economic Information

Data related to the production, distribution, and consumption of goods and services that informs decision-making.

Acquire

To obtain ownership of something, such as a company purchasing another company or an individual acquiring an asset.

Self-Interest

The pursuit of personal gain or advantage, which is a fundamental economic assumption about human behavior.

Welfare

Welfare denotes governmental support aimed at ensuring the basic physical and material well-being of people, particularly those in need.