The following ratios were supplied by six loan applicants. Given this information and the credit-scoring model developed by Altman (equation [17-4]), which loans have a high probability of defaulting next year?

Transcribed Image Text:

MARKET VALUE OF EQUITY BOOK! EARNINGS | CAPITAL TOTAL RETAINED EBIT TOTAL ASSETS 0.2 0.2 0.2 0.1 0.3 0.2 WORKING ASSETS 0.5 0.8 0.4 0.4 0.7 0.4 SALES ÷ TOTAL ASSETS VALUE OF DEBT TOTAL ASSETS 1.2 Applicant 1 Applicant 2 Applicant 3 Applicant 4 Applicant 5 Applicant 6 0.8 0.7 0.4 0.7 0.5 0.6 1.2 0.5 0.5 0.3 0.3 0.3 0.4 0.4 0.4