Which quantitative model uses multiple financial ratios to predict the probability of a company entering bankruptcy within two years?
ACapital Asset Pricing Model
BMiller-Orr Model
CBlack-Scholes Model
DAltman Z-Score Model
Explanation
* The Altman Z-Score combines five weighted financial ratios to assess corporate bankruptcy risk.
* Score > 2.99 indicates safe zone; Score < 1.81 indicates high probability of distress/distress zone.
* Widely applied by credit analysts and auditors to assess going-concern status.
Exam Relevance
- Topic: Financial Analysis
- Subtopic: Bankruptcy & Distress Prediction
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