A Number of Studies of Bankruptcies Have Shown That Certain

question 106

True/False

A number of studies of bankruptcies have shown that certain combinations of ratios,like the Altman Z-score,have good predictive power in indicating the likelihood of bankruptcy.

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Definitions:

Nonsufficient Funds

Nonsufficient funds (NSF) is a term used in banking to indicate that a demand for payment cannot be honored because there are inadequate funds in the account on which the instrument was drawn.

Accounts Receivable

Accounts receivable is the money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Electronic Funds Transfer

A system that allows the transfer of money between bank accounts without the physical exchange of cash, checks, or other negotiable instruments.

Outstanding Checks

Checks that have been issued and recorded in the payer's financial statements but have not yet been cashed or cleared by the bank.