Freedom Bank has received a loan application from a private company Automatic Corporation. An abbreviated portion of the financial information provided by the company is shown below:
Total assets $1,260,000
EBIT 158,000
Net working capital 84,000
Book value of equity 360,000
Accumulated retained earnings 320,000
Total liabilities 1,140,000
What is the Z-score for Automatic Corporation? What does the score predict?
1.1 and less - "Red" zone, there is a possibility of bankruptcy of the enterprise.
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