Suppose that the financial ratios of a potential borrowing firm took the following values: X₁ = Net working capital/Total assets = 0.65, X₂ = Retained earnings/Total assets = 1.10, X₃ = Earnings before interest and taxes/Total assets = 0.10, X₄ = Market value of equity/Book value of long-term debt = 2.05, X₅ = Sales/Total assets ratio = 0.45. Calculate the Altman's Z-score for this firm. A) 8.70 B) 4.35 C) 4.33 D) 2.33

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The Answer of Suppose that the financial ratios of a potential borrowing firm took the following values: X₁ = Net working capital/Total assets = 0.65, X₂ = Retained earnings/Total assets = 1.10, X₃ = Earnings before interest and taxes/Total assets = 0.10, X₄ = Market value of equity/Book value of long-term debt = 2.05, X₅ = Sales/Total assets ratio = 0.45. Calculate the Altman's Z-score for this firm. A) 8.70 B) 4.35 C) 4.33 D) 2.33

Suppose That the Financial Ratios of a Potential Borrowing Firm