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Altmans original Z-score bankruptcy model takes five key ratios into account: a. working capital / total assets b. retained earnings / total assets c. earnings
Altmans original Z-score bankruptcy model takes five key ratios into account:
a. working capital / total assets
b. retained earnings / total assets
c. earnings before interest and taxes / total assets
d. market value of equity / total liabilities
e. sales / total assets
Discuss the reasons why these ratios are linked to the probability of going into bankruptcy, and comment on their relative importance.
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