These problems come from working Lab 3: Predicting Bankruptcy Using Altman’s Z performed in the chapter text.
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 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. 305
b. 310
c. 300
d. 27
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. 510
b. 523
c. 530
d. 516
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. higher; higher
c. higher; lower
4. With recent financial pressure from e-commerce firms like Amazon and brick-and mortar stores like Walmart, would you predict in more recent years that firms would go bankrupt more or less?
a. More likely to go bankrupt
b. Less likely to go bankrupt
5. How many companies/years are considered in this dataset?
a. 2,330
b. 2,331
c. 2,329
d. 2,332