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Suppose that the financial ratios of a potential borrowing firm take the following values: X1 = Net working capital/Total assets = 0.10, X2 Retained earnings/Total
Suppose that the financial ratios of a potential borrowing firm take 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 0.22, X4 = Market value of equity/Book value of long-term debt 0.60, X5 = Sales/Total assets ratio 0.90 Calculate the Altman's Z-score for this firm. (Round your answer to 2 decimal places.) Altman's Z-score This firm falls in which category of bankruptcy risk based on its Z-score? High risk of bankruptcy Low risk of bankruptcy Indeterminate risk of bankruptcy OOO
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