<Dl> <Dd> X = retained earnings / total assets . Measures profitability that reflects the company's age and earning power . </Dd> </Dl> <Dd> X = retained earnings / total assets . Measures profitability that reflects the company's age and earning power . </Dd> <Dl> <Dd> X = earnings before interest and taxes / total assets . Measures operating efficiency apart from tax and leveraging factors . It recognizes operating earnings as being important to long - term viability . </Dd> </Dl> <Dd> X = earnings before interest and taxes / total assets . Measures operating efficiency apart from tax and leveraging factors . It recognizes operating earnings as being important to long - term viability . </Dd>

When using altman’s z-score a type i error occurs when