Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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During the great recession, under the Obama administration, business analysts in the financial industry were busy using financial-statement ratios and other mathematical models to do a stress tests, so as to determine if companies were deserving of government bailouts. The Dupont and Altman's z-score models were widely used during that period of economic stress.
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1. Based on the elements in the Dupont Model, discuss how useful is that model in determining how well a company is doing. Scaffolding Hint: For example, if results from calculating the "Current Ratio" is greater than or equal to 2.00, it shows that the company is doing well financially.
2. Research and discuss how useful is the (a) Dupont ratio and (b) Altman's z-score model, based on the elements that make up the ratio (equation).
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