Question
The following data are for the A, B, and C Companies: Company Variables A B C Current assets $150,000 $170,000 $180,000 Current liabilities $60,000 $50,000
The following data are for the A, B, and C Companies: Company Variables A B C Current assets $150,000 $170,000 $180,000 Current liabilities $60,000 $50,000 $30,000 Total assets $300,000 $280,000 $250,000 Retained earnings $80,000 $90,000 $60,000 Earnings before interest and taxes $70,000 $60,000 $50,000 Market price per share $20.00 $18.75 $16.50 Number of shares outstanding 9,000 9,000 9,000 Book value of total debt $30,000 $50,000 $80,000 Net Sales $430,000 $400,000 $200,000 Required: Compute the Altman-Z score for company C and comment on the bankruptcy risk of the company.
- A.
Altman-Z score is 1.6 and there is bankruptcy risk.
- B.
Altman-Z score is 3.6 and there isn't any bankruptcy risk.
- C.
Altman-Z score is 5.1 and there isn't any bankruptcy risk.
- D.
Altman-Z score is 1.5 and there isn't any bankruptcy risk.
- E. Altman-Z score is 0.36 and there is bankruptcy risk.
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