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Computation of z score

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Given the following numbers:

Working capital $ 90,000
Total assets 620,000
Retained earning 30,000
Earnings before interest and taxes 55.000
Market value of equity 100,000
Book value of total debt 280,000
Sales 440,000

a) Compute the z score for the data company.
b) Considering the Altman model, comment on the likelihood that this firm will experience financial failures.

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Solution Summary

This solution shows how to calculate the Z-score for a company given their financial statement, and discusses the likelihood that the company will experience financial failure based on those numbers and the Altman model.

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Computation of z score:

working capital $ 90,000
total assets 620,000 ...

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