Suppose that the financial ratios of a potential borrowing firm took the following values:
X1 = 0.3
X2 = 0
X3 = –0.30
X4 = 0.15
X5 = 2.1
Altman’s discriminant function takes the form:
Z = 1.2 X1 + 1.4 X2 + 3.3 X3 + 0.6 X4 + 1.0 X5
1. The Z score for the firm would be
These short questions belong to Finance and it is about calculating the Z score for a firm with financial ratios for Altman’s discriminant function.
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