Which of the following financial ratios is not used to develop Altman's Z score from multiple discriminate analysis?
A)Market value of equity/book debt
B)EBIT/total assets
C)Interest expense/total assets
D)Working capital/total assets

Question

Quizplus · Accepted Answer

Altman's Z score is a formula used to predict the likelihood of a company going bankrupt. It does not include the ratio of interest expense to total assets. The ratios used in the Z score calculation include working capital to total assets, retained earnings to total assets, earnings before interest and tax (EBIT) to total assets, market value of equity to total debt, and sales to total assets.

Which of the Following Financial Ratios Is Not Used to Develop