hard · Principles of Finance valuation
Using the Altman Z-score for a manufacturer, a firm has the following ratios: X₁(WC/TA)=0.1, X₂(RE/TA)=0.2, X₃(EBIT/TA)=0.05, X₄(MVE/BVL)=0.5, and X₅(S/TA)=1.0.
What is the Z-score and the implied risk category?
- 1.450; Distress Zone
- 3.120; Safe Zone
- 1.865; Grey Zone
- 0.865; Distress Zone
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