# Solution Library

# Calculate Z Score For Asset To Debt Ratio And Calculate Asset To Debt Ratio With Cut-off Rate Given

**Question**

Using a modified discriminant function similar to Altman’s, a bank estimates the following coefficients for its portfolio of loans:

Z = 1.4X1 + 1.09X2 + 1.5X3

Where X1 = debt to asset ratio; X2 = net income and X3 = dividend payout ratio.

1. What is the Z-score if the debt to asset ratio is 40 percent, net income is 12 percent, and the dividend payout ratio is 60 percent?

a. 1.59.

b. 1.48.

c. 1.36.

d. 1.28.

e. 1.20.

2. Using Z=1.682 as the cut-off rate, what should be the debt to asset ratio of the firm in order for the bank to approve the loan?

a. 40.0 percent.

b. 46.5 percent.

c. 51.5 percent.

d. 54.0 percent.

e. 65.0 percent.

**Summary**

These short questions belong to Finance and it is about calculating the Z score for bank with asset to debt ratio, net income and dividend payout ratio given and if the cut-off rate is given, the bank’s debt to asset ratio.

**Total Word Count 66**

## Comments

Rashathis is a very good website

maaniI have 50 questions for the same test your page is showing only 28

joeannehi can you please help or guide me to answer my assignments. thanks

joeannehi can anyone help or guide me to my assignments. thanks

MonikCristinaThis solution is perfect ...thanks

JaneteHello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

SandeepPerfect bank of solution.

Oxanagreat !

Paul Brandon-Fritziusthanks for the quick response. the solution looks good. :)

tina Johnsonthnx for the answer. it was perfect. just the way i wanted it.

Giuseppeworks fine.