11-94 According to Altman's credit scoring model,this firm should be considered

Question

Quizplus · Accepted Answer

Altman's credit scoring model categorizes firms into high, moderate, or low default risk based on their financial ratios. A firm with a high default risk has a Z-score below 1.81, whereas a firm with a low default risk has a Z-score above 2.99. Since the firm's Z-score is not mentioned in the question, we cannot determine whether it falls in the low or moderate risk category. However, since the option for "an indeterminate default risk firm" is not given, we can assume that the firm falls in the high default risk category, given that it is not mentioned to have a very strong financial position. Therefore, the best choice is A) a high default risk firm.

11-94 According to Altman's Credit Scoring Model,this Firm Should Be