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Altman's discriminant function takes the form: Z=1.2 Working capital/Total assets +1.4 Retained earnings/Total assets +3.3EBIT/ Total assets +0.6 Market value of equity/Long-term debt +1.0 Sales/Total
Altman's discriminant function takes the form: Z=1.2 Working capital/Total assets +1.4 Retained earnings/Total assets +3.3EBIT/ Total assets +0.6 Market value of equity/Long-term debt +1.0 Sales/Total assets How would you interpret a Z-score of 3.2? Select one: a. The interpretation of the Z-score is always dependent on a loan manager's subjective opinion. b. The Z-score lies within the 'high default' zone and thus a loan should not be granted. c. The Z-score lies within the 'zone of ignorance' and thus the borrower may or may not default. d. The Z-score lies within the 'safe' zone and thus a loan should be granted
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