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QUESTION 2 (20 marks) Calculate the Altmans Z value for the following farms. (10 marks) Which of the two farms will you invest into and
QUESTION 2 (20 marks)
Calculate the Altmans Z value for the following farms. (10 marks)
Which of the two farms will you invest into and why? (5 marks)
What are the limitations of the Altmans Z statistics? (5 marks)
Variables | Crystal Farms | Lavish farm |
X1(net working capital /total asset) | 0.4563 | 0.1354 |
X2(retained earnings/total asset) | 0.5236 | 0.0124 |
X3(EBIT/total assets) | 0.1324 | 0.2013 |
X4(market value of equity/book value of total liability) | 2.5632 | 0.2435 |
X5(sales/total asset) | 0.9085 | 0.4032 |
Altmans Z - values |
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