Question

ollowing are selected ratios for Logitech International SA for the company’s 2016 and 2015 fiscal years. Compute and interpret Altman Z-scores for both years.

Ratio					2016	2015
Working capital to total assets					0.386	0.390
Retained earnings to total assets					0.728	0.652
EBIT to total assets					0.097	0.108
Market value of equity to total assets					1.951	1.516
Market value of equity to total liabilities					4.580	3.235
Sales to total assets					1.524	1.405

Round answers to three decimal places.

Year	Z-score
2016	Answer
2015	Answer

Based on your above calculations, select the most appropriate answer.

Logitech has a lower Altman Z-score in 2016, which means that the rist of bankruptcy is lower.

Logitech has a higher Altman Z-score in 2016, which means that the risk of bankruptcy is lower.

Logitech has a higher Altman Z-score in 2016, which means that the risk of bankruptcy is higher.

Logitech has a lower Altman Z-score in 2016, which means that the rist of bankruptcy is higher.

Answer 1

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