Z = 1.2 X1+1.4X2+3.3X3+0.6X4+1.0X5
X1 =Working capital/total assets
X2=Retained earnings/total assets
X3= EBIT/ Total assets
X4= Market value of equity/ book value of long-term debt
X5= Sales/total assets
X1: 1 777 000/25 678 000 = 0.0692
X2: 177 000/25 678 000 = 0.00689
X3: 2 605 000/25 678 000= 0.10145
X4:10 098 000/ 5 044 000 = 2.002
X5: 30 000 000/25 678 000= 1.1683
Z = 1.2 (0.0692) +1.4(0.00689) +3.3(0.10145) +0.6(2.002) +1.0(1.1683)
= 0.08304+0.009646+0.3348+1.2912+1.1683 =2.796986
= 2.7970
A Z score of greater than 1.8 but less than 2.99 does not provide a clear financial health of a company. Therefore, am not sure about the firm’s level of financial risk
simpleman Anto answered the question on February 8, 2018 at 11:32
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