Answer:
d. The company's Z-score indicates the company will go bankrupt, and the company stays healthy.
Step-by-step explanation:
The Altman model calculates the z-score by using financial ratios to predict if a company would go bankrupt.
Z score = 1.2 (net working capital / total assets) + 1.4(retained earnings / total assets) + 3.3 (EBIT / Total assets) + 0.6 (market value of equity / book value of liabilities) + 1.0 (sales / total assets).
Scores less than 1.81 indicates a bankruptcy is likely to occur.
Scores greater than 3 indicates a bankruptcy is not likely to occur.
A type 1 error is when a true null hypothesis is rejected.
In this case it would be that the company's Z-score indicates the company will go bankrupt, and the company stays healthy.
A type 2 error is when a false null hypothesis is accepted.
I hope my answer helps you.