All of the following ratios are used in the calculation of a company's Z-value EXCEPT
A) working capital/total assets.
B) retained earnings/total assets.
C) current assets/current liabilities.
D) market value of equity/total liabilities.
E) sales/total assets.

Question

Quizplus · Accepted Answer

DThe Z-score, a formula for predicting bankruptcy, includes ratios such as working capital/total assets, retained earnings/total assets, earnings before interest and taxes/total assets, market value of equity/total liabilities, and sales/total assets. It does not include the current ratio (current assets/current liabilities), which is a liquidity ratio not used in the Z-score calculation.

All of the Following Ratios Are Used in the Calculation