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Mathematical calculators Physical calculators Economic calculators Other calculators

 

Altman's Z Score

 

 

x1 = net working capital / total capital (assets)

x2 = retained earnings / total capital

x3 = earnings before interest and taxes / total capital

x4 = market value of equity (market price of shares) / debt capital

x5 = turnover (sales) / total capital

WHAT IS IT?
Altman's analysis is one of the very effective financial analyses, which, based on six selected indicators, allows defining with a certain probability the state and direction of an organization and thus can predict its future. More here

 



 

 

 

CALCULATION:

Enter total capital

Enter debt capital

Enter net working capital

Enter retained earnings

Enter earnings before interest and taxes

Enter market value of equity (market price of shares)

Enter turnover (sales)

Enter number of decimal places

EXAMPLE:

The company's total assets are valued at $3,500,000, while their working capital is $4,200,000. Their liabilities amount to $5,000,000, while retained earnings are $800,000. Earnings before interest and taxes reached $6,500,000. Total sales are $8,300,000, while the market value of equity is $7,000,000.

Z = (1.2 x A) + (1.4 x B) + (3.3 x C) + (0.6 x D) + (0.999 x E)

(1.2 x (4,200,000 / 3,500,000)) + (1.4 x (800,000 / 3,500,000)) + (3.3 x (6,500,000 / 3,500,000)) + (0.6 x (7,000,000 / 5,000,000)) + (0.999 x (8,300,000 / 3,500,000))

= (1.2 x 1.2) + (1.4 x 0.229) + (3.3 x 1.857) + (0.6 x 1.4) + (0.999 x 2.371)

Altman Z-Score = 11.097 - safe zone.

 

 



 

 

 

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