# Following the instructions of Lab 3 performed in the chapter text, analyze the chance of bankruptcy for manufacturing firms included in the Lab 3 Alt Data.xlsx dataset. Required: 1. Compute Altmans five factors used to predict bankruptcy.2. Weight each of those factors using Altmans bankruptcy prediction weights to arrive at Altmans Z-score. 3. Classify each company as either in the

Chapter 10, Problems #10

Following the instructions of Lab 3 performed in the chapter text, analyze the chance of bankruptcy for manufacturing firms included in the Lab 3 Alt Data.xlsx dataset.

Required:
1. Compute Altman’s five factors used to predict bankruptcy.
2. Weight each of those factors using Altman’s bankruptcy prediction weights to arrive at Altman’s Z-score.

3. Classify each company as either in the distress zone, gray zone, or safe zone for bankruptcy using Altman’s classifications through use of a histogram. Open Excel File Lab 3 Alt Data.xlsx

Assessment:
1. Perform the analysis, and take a screenshot of the top 10 rows of calculations in your spreadsheet (including columns including X1:X5 and the Altman Z calculation); label it “Lab 3 Alt Submission.jpg”. Submit to your instructor.
2. Answer the multiple choice questions.
1. How many firms have an Altman Z-score less than 1.8 and fall in the distress zone?
a. 3,662
b. 9,683
c. 18,741
d. 5,396
2. How many firms have an Altman Z-score greater than or equal to 1.8 but less than 3.0 and fall in the gray zone?
a. 5,396
b. 9,683
c. 3,662
d. 18,741
3. Based on Altman Z’s formulas, the _____ each of the five factors (or financial ratios), the _____ the chance of going bankrupt.
a. lower; lower
b. lower; higher
c. higher; higher
4. For factor X4, what is the appropriate weight based on Altman’s Z?
a. 0.6
b. 1
c. 3.3
d. 1.4
5. How many companies/years are considered in this dataset?
a. 18,740
b. 18,742
c. 18,743
d. 18,741

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Related Book For

## Accounting Information Systems

3rd International Edition

Authors: Vernon Richardson

ISBN: 1260703835