Question
Compute and Interpret Altman's Z-scores Following is selected financial information for ebay, for its fiscal years 2005 and 2006. (In millions, except per share data)
Compute and Interpret Altman's Z-scores Following is selected financial information for ebay, for its fiscal years 2005 and 2006.
(In millions, except per share data) | 2006 | 2005 |
---|---|---|
Current assets | $ 4,970.59 | $ 3,183.24 |
Current liabilities | 2,518.39 | 1,484.93 |
Total assets | 13,494.01 | 11,788.99 |
Total liabilities | 2,589.38 | 1,741.00 |
Shares outstanding | 1,368.51 | 1,404.18 |
Retained earnings | 4,538.35 | 2,819.64 |
Stock price per share | 30.07 | 43.22 |
Sales | 5,969.74 | 4,552.40 |
Earnings before interest and taxes | 1,439.77 | 1,445.18 |
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.) 2006 z-score = Answer
2005 z-score = Answer Which of the following best describes the company's likelihood to go bankrupt given the z-score in 2006 compared to 2007.
The z-score in 2006 is half of the 2005 score. Both z-scores are well above the score that represents a healthy company.
The z-score in 2006 is double the 2005 score. The z-score has increased sharply, which suggests the company has greatly increased the risk of bankruptcy.
The z-score in 2006 is half of the 2005 score. The z-score has decreased sharply, which suggests the company is in financial distress.
The z-score in 2006 is double the 2005 score. The z-score has increased sharply, which suggests the company has greatly lowered the risk of bankruptcy.
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