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Suppose that the financial ratios of a potential borrowing firm took the following values: X 1 = Net working capital/Total assets = 0.10, X 2

Suppose that the financial ratios of a potential borrowing firm took the following values: X₁ = Net working capital/Total assets = 0.10, X₂ = Retained earnings/Total assets = 0.20, X₃ = Earnings before interest and taxes/Total assets = 0.20, X₄ = Market value of equity/Book value of long-term debt = 0.60, X₅ = Sales/Total assets ratio = 0.8. Calculate the Altmans Z-score for this firm.

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