The formula that predicts the likelihood of a corporation going bankrupt is called
A) the return on investment.
B) the CAPM.
C) the index of sustainable growth.
D) operating cash flow.
E) the Z-value.

Question

Quizplus · Accepted Answer

The formula that predicts the likelihood of a corporation going bankrupt is called the Z-value (also known as the Altman Z-score). It is used to assess a company's financial health and its ability to meet its financial obligations. The Z-value formula takes into account a range of financial ratios, including profitability, leverage, liquidity, solvency, and activity. A lower Z-value suggests a higher risk of bankruptcy, while a higher Z-value indicates a lower risk of bankruptcy. The Z-value is a commonly used tool for credit analysts, investors, and lenders to evaluate the financial strength of companies.

The Formula That Predicts the Likelihood of a Corporation Going