Question

Bankruptcy Risk and Z-Score Analysis Following are selected ratios for JetBlue Airways for two recent fiscal years. Ratio 2012 2011 Current ratio 0.684 1.153 Working capital to total assets (0.072) 0.031 Retained earning to total assets 0.061 0.043 EBIT to total assets 0.053 0.046 Market value of equity to total liabilities 0.278 0.251 Sales to total assets 0.705 0.637 Compute and interpret Altman Z-scores for the company for both years. (Do not round until your final answer then round your answers to two decimal places.) 2012 Z-score = 0 2011 2-score = 0 x

Answer 1

Z-Score - 1. 2A + 1.4 B+ Z3C to 6D+IIOE A = working capital 1 Total Assets B = retained earning / Total assets c = Earning before interest and tax / Total assets Da Markel value of equity / Total liabilities E = sales 1 Tokel assets 2012 Z-score = 1.260.072 +1.460.061 +3.380.053 40 6X0.278+ loxo.705 = 0.0864 to 10854 +0.17 49 +0.1668 +0.705 = 1.2185 2011 Z-score = 1.2X0.031 +1.480.043 +3.3X0.046 +0.64 0.251 Tlioxo. 637 = 0.0372 +0.0602 to.1518 to 1506 +0.637 = 1.0368