|
This insolvency predictor takes the following
form -:
Z = 1.03A + 3.07B + 0.66C + 0.4D
Z < 0.862; then the firm is classified as "failed"
WHERE:
A = Working Capital/Total Assets
B = Net Profit before Interest and Taxes/Total Assets
C = Net Profit before Taxes/Current Liabilities
D = Sales/Total Assets |