# Question: bankruptcy risk and zscore analysis following are selected ratios for...

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Bankruptcy Risk and Z-Score Analysis

Following are selected ratios for JetBlue Airways for two recent
fiscal years.

Ratio | 2010 | 2009 |
---|---|---|

Current ratio | 1.253 | 1.326 |

Working capital to total assets | 0.042 | 0.058 |

Retained earnings to total assets | 0.033 | 0.019 |

EBIT to total assets | 0.050 | 0.040 |

Market value of equity to total liabilities | 0.390 | 0.320 |

Sales to total assets | 0.573 | 0.503 |

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.)

2010 z-score = Answer

2009 z-score = Answer

Which of the following statements best describes the company's Altman z-scores?

Both Altman z-scores are above 3.00 which indicate the company has a very high probability of bankruptcy.

Both Altman z-scores are below 1.80 which indicate the company has a very low probability of bankruptcy.

Both Altman z-scores are above 3.00 which indicate the company has a very low probability of bankruptcy.

Both Altman z-scores are below 1.80 which indicate the company has a very high probability of bankruptcy.