Principles of Corporate Finance

(Barry) #1

Credit Analysis


Example - If the Altman Z score cut off for a credit
worthy business is 2.7 or higher, would we accept
the following client?
EBIT
total assets


sales
total assets

market equity
book debt

=

=

=

12

14

9

.

.

.

retained earnings
total assets

working capital
total assets

=

=

.

.

4


12

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