easy · Principles of Finance financial-statements-markets-wc

A firm has an Altman Z-score of 1.5. Based on standard interpretation, which of the following is most likely to occur?

1. The firm sits in the 'Safe Zone' and is unlikely to face default risk
2. The firm is in the 'Distress Zone' and has a high probability of bankruptcy
3. The firm has excess liquidity on hand and should raise its dividend payout
4. The score of 1.5 is inconclusive, falling squarely within the 'Grey Zone'

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