Page 17 - PowerPoint Presentation

BUSINESSES IN DIFFICULTY

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Suggested solution

• (a) Yes. Z-scores less than 1,8 shows a high risk of short

term failure and A-scores greater than 25 indicate that a

company is likely to fail.

• (b) No. Z-scores less than 1,8 shows a high risk of short

term; however, A-scores less than 25 indicate that a

company is not in danger of failing.

• (c) No (not a high risk). Z-scores between 1,8 and 2,99

indicate that a company is at a potential risk of failing

and an A-score of 25 or less indicate that a company is

not in danger of failing.

• (d) No. A-scores greater than 25 indicate that a company

is likely to fail; however, Z-scores greater than 2,99 show

a low risk of failing

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