Suppose that the financial ratios of a potential borrowing firm took the following values:
X₁= 0.30
X₂ = 0
X₃ = -0.30
X₄ = 0.15
X₅ = 2.1
Altman's discriminant function takes the form:
Z = 1.2 X₁+ 1.4 X₂ + 3.3 X₃ + 0.6 X₄ + 1.0 X₅
-The Z score for the firm would be
A) 1.64.
B) 1.56.
C) 2.1.
D) 3.54.
E) 2.96.
Correct Answer:
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