Which one of the following financial ratios is not used to develop Altman's Z score from multiple discriminant analysis?
A) Market value of equity/Total 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 financial model used to predict the likelihood of bankruptcy within a two-year period. The formula includes several financial ratios, but Interest expense/Total assets is not one of them. The ratios used include Working capital/Total assets, Retained earnings/Total assets, Earnings before interest and tax (EBIT)/Total assets, Market value of equity/Total book debt, and Sales/Total assets.

Which One of the Following Financial Ratios Is Not Used