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
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.
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
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?
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?
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?
5. How many companies/years are considered in this dataset?
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Accounting Information Systems
3rd International Edition
Authors: Vernon Richardson