The Altman Z Score in been determined to be a reasonably accurate predictor of the pending bankruptcy.
Question:
The Altman Z Score in been determined to be a reasonably accurate predictor of the pending bankruptcy. For example, over the last 40 years, the Score has proven to accurately predict bankruptcy (two years in advance) more than 80% of the time. In March 2017, HH Gregg an electronics retailer filed for bankruptcy protection. Below is selected data for Gregg as of 3/31/15; two years prior to the bankruptcy filing. Calculate Gregg’s Z score as of 3/31/15? All amounts are in thousands (meaning CA would have been $328,393,000) except for share price.
Current Assets - $328,393
Current Liabilities - $214,097
Total Assets - $467,629
Total Liabilities - $294,041
Retained Earnings - $22,132
Earnings (Loss) Before Interest/Taxes - $(99,448)
Shares outstanding – 28,130
Share price - $6.29
Total Sales - $2,129,374
A. 0.45
B. 0.99
C. 2.04
D. 3.76
E. 4.54
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter