Suppose that the financial ratios of a potential borrowing firm take 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 = 0.42, X4 = Market value of equity/Book value of long-term debt = 0.80, X5 = Sales/Total assets ratio = 0.99. Calculate the Altman's Z-score for this firm. (Round your answer to 2 decimal places.) Altman's Z-score 2.65 ✪ This firm falls in which category of bankruptcy risk based on its Z-score? High risk of bankruptcy Indeterminate risk of bankruptcy Ⓒ Low risk of bankruptcy

Suppose that the financial ratios of a potential borrowing firm take 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 = 0.42, X4 = Market value of equity/Book value of long-term debt = 0.80, X5 = Sales/Total assets ratio = 0.99. Calculate the Altman's Z-score for this firm. (Round your answer to 2 decimal places.) Altman's Z-score 2.65 ✪ This firm falls in which category of bankruptcy risk based on its Z-score? High risk of bankruptcy Indeterminate risk of bankruptcy Ⓒ Low risk of bankruptcy

Name: 11 Suppose that the financial ratios of a potential borrowing firm tak
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Description: 11 Suppose that the financial ratios of a potential borrowing firm take 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 = 0.42, X4 = Mar

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 10P

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