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Business
Management
Current liabilities Total assets Retained earnings The following data are for the A, B, and C Companies: Variables Current assets A $150,000 $ 60,000 $300,000 Company B $170,000 $ 50,000 $280,000 C $180,000 $ 30,000 $250,000 $ 60,000 $ 80,000 $ 90,000 Earnings before interest and taxes $ 70,000 $ 60,000 $ 50,000 Market price per share $ 20.00 $ 18.75 $ 16.50 Number of shares outstanding 9,000 9,000 9,000 Book value of total debt Sales $ 30,000 $430,000 $ 50,000 $ 80,000 $400,000 $200,000 REQUIRED: A. B. Using MS Excel, compute the Z score for each company. According to the Altman model, which of these firms is most likely to experience financial failure?

Current liabilities Total assets Retained earnings The following data are for the A, B, and C Companies: Variables Current assets A $150,000 $ 60,000 $300,000 Company B $170,000 $ 50,000 $280,000 C $180,000 $ 30,000 $250,000 $ 60,000 $ 80,000 $ 90,000 Earnings before interest and taxes $ 70,000 $ 60,000 $ 50,000 Market price per share $ 20.00 $ 18.75 $ 16.50 Number of shares outstanding 9,000 9,000 9,000 Book value of total debt Sales $ 30,000 $430,000 $ 50,000 $ 80,000 $400,000 $200,000 REQUIRED: A. B. Using MS Excel, compute the Z score for each company. According to the Altman model, which of these firms is most likely to experience financial failure?

Foundations of Business - Standalone book (MindTap Course List)
Foundations of Business - Standalone book (MindTap Course List)
4th Edition
ISBN:9781285193946
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Chapter15: Using Management And Accounting Information
Section: Chapter Questions
Problem 5DQ
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Current liabilities Total assets Retained earnings The following data are for the A, B, and C Companies: Variables Current assets A $150,000 $ 60,000 $300,000 Company B $170,000 $ 50,000 $280,000 C $180,000 $ 30,000 $250,000 $ 60,000 $ 80,000 $ 90,000 Earnings before interest and taxes $ 70,000 $ 60,000 $ 50,000 Market price per share $ 20.00 $ 18.75 $ 16.50 Number of shares outstanding 9,000 9,000 9,000 Book value of total debt Sales $ 30,000 $430,000 $ 50,000 $ 80,000 $400,000 $200,000 REQUIRED: A. B. Using MS Excel, compute the Z score for each company. According to the Altman model, which of these firms is most likely to experience financial failure?
Transcribed Image Text:Current liabilities Total assets Retained earnings The following data are for the A, B, and C Companies: Variables Current assets A $150,000 $ 60,000 $300,000 Company B $170,000 $ 50,000 $280,000 C $180,000 $ 30,000 $250,000 $ 60,000 $ 80,000 $ 90,000 Earnings before interest and taxes $ 70,000 $ 60,000 $ 50,000 Market price per share $ 20.00 $ 18.75 $ 16.50 Number of shares outstanding 9,000 9,000 9,000 Book value of total debt Sales $ 30,000 $430,000 $ 50,000 $ 80,000 $400,000 $200,000 REQUIRED: A. B. Using MS Excel, compute the Z score for each company. According to the Altman model, which of these firms is most likely to experience financial failure?
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