E4-28. Compute and Interpret Altman's Z-scores Following is selected financial information for Netflix, for 2018 and 20 17.

$ thousands, except per share data 2018 Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,694, 135 Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,487 ,320 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,974,400 Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,735,635 Shares outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436,598,597 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,942,359 Stock price per share . . . . . . . . . . . . . . . . . . . . . . . . . . . • . 267.66 Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,794,341 Earnings before interest and taxes. . . . . . . . . . . . . . . . . . . 1,605,226 Required 2017

$ 7,669,974 5,466,312 19,012,742 15,430,786 433,392,686 1,731 ,117 191 .96 11,692,713 838,679

a. Compute and compare the Altman Z-scores for both years. What explains the apparent trend?

b. Is the company more likely to go bankrupt given the Z-score in 2018 compared to 20 17? Explain.