In: Finance
Calculate the Z-score of the firm that has the following ratios:
Working capital/total assets = 0.34
Retained earnings/total assets = 0.15
EBIT/total assets = 0.00
Market value equity/book value of long-term debt = 0.80
Sales/total assets = 1.6
Round your answer to 2 decimal places.
For example, if your answer is 5.689, write down 5.69
ALTMAN Z SCORE
X1 = Working Capital (Current Assets - Current Liabilities) / Total Assets (liquidity of firm)
X2= Retained Earnings/Total Assets (measures accumulated profits relative to assets)
X3= Earnings Before Interest & Taxes (EBIT) / Total Assets (measures amount of profit from the assets)
X4 = Market Value of Equity (Mkt. Cap. + Preferred Stock) / Total Liabilities (compares the company's value versus to its debt)
X5= Sales / Total Assets (this is an efficiency ratio that measures how much the company's assets are producing for a unit of sales).
1.2(X1) +1.4(X2) + 3.3(X3) + 0.6(X4) + 1.0 *(X5)
Z score is 2.70.
Z score is 2.70.