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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.

    © BrainMass Inc. brainmass.com June 4, 2020, 3:33 am ad1c9bdddf
    https://brainmass.com/statistics/z-test/computation-zscore-521231

    Solution Preview

    Computation of z score:

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

    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.

    $2.19

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