Bankruptcy Risk and Z-Score Analysis Following are selected ratios for American Airways for two recent fiscal years.

Ratio	2005	2006
Current ratio	0.725	0.740
Working capital to total assets	(0.088)	(0.091)
Retained earnings to total assets	(0.176)	(0.183)
EBIT to total assets	0.025	0.064
Market value of equity to total liabilities	0.150	0.250
Sales to total assets	0.790	0.870

Compute and interpret Altman Z-scores for the company for both years. (Do not round until your final answer; then round your answers to two decimal places.) 2005 z-score = Answer 2006 z-score = Answer Which of the following statements best describes the company's Altman z-scores?

Both Altman z-scores are below 1.80 which indicate the company has a very high probability of bankruptcy.

Both Altman z-scores are above 3.00 which indicate the company has a very high probability of bankruptcy.

Both Altman z-scores are below 1.80 which indicate the company has a very low probability of bankruptcy.

Both Altman z-scores are above 3.00 which indicate the company has a very low probability of bankruptcy.