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Altman Z-Score Calculator

LAST UPDATE: August 24th, 2018

Calculator

What is an Altman Z-Score?

The Altman Z-Score gauges a manufacturing company’s probability of bankruptcy.

Formula

A = Working Capital / Total Assets

B = Retained Earnings / Total Assets

C = EBIT / Total Assets

D = Market Value of Equity / Total Liabilities

E = Sales / Total Assets

Altman Z-Score = (1.2 x A) + (1.4 x B) + (3.3 x C) + (0.6 x D) + E

Example

An organization has total assets of $7,000, working capital of $3,000, retained earnings of $750, EBIT of $3,000, market value of equity of $1,500, total liabilities of $2,000, and sales of $12,000.

A = $3,000 / $7,000 = 0.4286

B = $750 / $7,000 = 0.1071

C = $3,000 / $7,000 = 0.4286

D = $1,500 / $2,000 = 0.75

E = $12,000 / $7,000 = 1.7143

Altman Z-Score = (1.2 x 0.4286) + (1.4 x 0.1071) + (3.3 x 0.4286) + (0.6 x 0.75) +1.7143

Altman Z-Score = 0.51432 + 0.14994 + 1.41438 + 0.45 + 1.7143 = 4.243

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