Page 117 - Demo

جميع الحقوق محفوظة ـ اإلعتداء عىل حق املؤلف 117 بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونيةAltman Z-Score = 6.56 x X1 + 3.26 X2 + 6.72 X3 + 1.05 X4Bankruptcy prediction: total Z score and if:  DISTRESS ZONE (Z < 1.81): If the Altman Z Score is less than 1.81, then the firm is said to be in ‘Distress Zone’ means the financial position of the company is in a distress and that the company if likely to head towards insolvency in the next two years and files for a bankruptcy.  GREY ZONE (1.81 < Z < 2.99): If the Altman Z Score is between 1.81 and 2.99, the firm is said to be in ‘Grey Zone’ which means it has a moderate probability of bankruptcy in near future. It does not mean that firms lying in this range have a weak financial stability but one needs to be cautious and be diligent of the risks.  SAFE ZONE (Z > 2.99): If the Altman Z Score is over 2.99, the firm is said to be in the ‘Safe Zone’. Which means the company is has a strong financial position and not headed towards bankruptcy in near future. Second: Altman Z-model for Service companiesThe Altman Z-score is a statistical model is a formula for determining whether a company, is headed for bankruptcy. Based on formula takes into account profitability, leverage, liquidity, solvency, and activity ratios. Where:  X1 = working capital / total assets  X2 = retained earnings / total assets  X3 = earnings before interest and tax / total assets  X4 = Book value of equity / total liabilities Calculate