Altman's Z Score Model Calculator

✖Working Capital measures the liquidity and short-term financial health of a business, indicating the company's ability to meet its short-term obligations with its current assets.ⓘ Working Capital [A]			+10% -10%
✖Retained Earnings represent the cumulative profits that a company has retained and reinvested into its business over time, rather than distributing them to shareholders as dividends.ⓘ Retained Earnings [RE]			+10% -10%
✖Earnings Before Interest and Taxes is a measure of a company's profitability that reflects its operating performance before considering the effects of interest expense and income taxes.ⓘ Earnings Before Interest and Taxes [C]			+10% -10%
✖Market Value of Equity is a financial metric that represents the total value of a company's outstanding shares of common stock in the open market.ⓘ Market Value of Equity [D.]			+10% -10%
✖Total Sales represents the aggregate amount of money generated by a company from its primary business activities over a specific period.ⓘ Total Sales [E]			+10% -10%

✖Zeta Value is a measure of a company's financial health and likelihood of bankruptcy.ⓘ Altman's Z Score Model [ζ]

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Formula

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Altman's Z Score Model

Formula

`"ζ" = 1.2*"A"+1.4*"RE"+3.3*"C"+0.6*"D."+1.0*"E"`

Example

`"264300"=1.2*"60000"+1.4*"3500"+3.3*"40000"+0.6*"9000"+1.0*"50000"`

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Altman's Z Score Model Solution

STEP 0: Pre-Calculation Summary

Formula Used

Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales
ζ = 1.2*A+1.4*RE+3.3*C+0.6*D.+1.0*E
This formula uses 6 Variables

Variables Used

Zeta Value - Zeta Value is a measure of a company's financial health and likelihood of bankruptcy.
Working Capital - Working Capital measures the liquidity and short-term financial health of a business, indicating the company's ability to meet its short-term obligations with its current assets.
Retained Earnings - Retained Earnings represent the cumulative profits that a company has retained and reinvested into its business over time, rather than distributing them to shareholders as dividends.
Earnings Before Interest and Taxes - Earnings Before Interest and Taxes is a measure of a company's profitability that reflects its operating performance before considering the effects of interest expense and income taxes.
Market Value of Equity - Market Value of Equity is a financial metric that represents the total value of a company's outstanding shares of common stock in the open market.
Total Sales - Total Sales represents the aggregate amount of money generated by a company from its primary business activities over a specific period.

STEP 1: Convert Input(s) to Base Unit

Working Capital: 60000 --> No Conversion Required
Retained Earnings: 3500 --> No Conversion Required
Earnings Before Interest and Taxes: 40000 --> No Conversion Required
Market Value of Equity: 9000 --> No Conversion Required
Total Sales: 50000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

ζ = 1.2*A+1.4*RE+3.3*C+0.6*D.+1.0*E --> 1.2*60000+1.4*3500+3.3*40000+0.6*9000+1.0*50000

Evaluating ... ...

ζ = 264300

STEP 3: Convert Result to Output's Unit

264300 --> No Conversion Required

FINAL ANSWER

264300 <-- Zeta Value

(Calculation completed in 00.004 seconds)

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< 19 Equity Calculators

Float-Adjusted Market Capitalisation Index

Go Float Adjusted Market Capitalisation = (Fraction of Shares Outstanding*Number of Shares Outstanding of Security*Price of the Security)/(sum(x,1,Number of Securities in the Index,(Fraction of Shares Outstanding*Number of Shares Outstanding of Security*Price of the Security)))

Market Capitalization Index

Go Market Capitalization = (Number of Shares Outstanding of Security*Price of the Security)/(sum(x,0,Number of Securities in the Index,(Number of Shares Outstanding of Security*Price of the Security)))

Laspeyres Price Index

Go Laspeyres Price Index = ((sum(x,1,2,(Price in Final Period*Quantity in Base Period)))/(sum(x,1,2,(Price in Base Period*Quantity in Base Period))))*100

Paasche Price Index

Go Paasche Price Index = ((sum(x,1,3,(Price in Final Period*Quantity in Final Period)))/(sum(x,1,3,(Price in Base Period*Quantity in Final Period))))*100

Altman's Z Score Model

Go Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales

Capital Allocation Line

Go Expected Return on Portfolio = ((Expected Return on Treasury Bill*Weight of Treasury Bill)+(Expected Return of Stock*Weight of Stock))*100

Justified Forward Price to Earnings Ratio

Go Justified Forward Price to Earnings Ratio = (Dividend/Earnings Per Share)/(Cost of Equity-Growth Rate)

Margin Call Price

Go Margin Call Price = Initial Purchase Price*((1-Initial Margin Requirement)/(1-Maintenance Margin Requirement))

Dividend Coverage Ratio

Go Dividend Coverage Ratio = (Net Income-Preferred Dividend)/Common Dividend

Fisher Price Index

Go Fisher Price Index = sqrt(Laspeyres Price Index*Paasche Price Index)

Momentum Indicator

Go Momentum Indicator = (Closing Price of Particular Stock/Closing Price of Stock N Days Ago)*100

Marshall-Edgeworth Price Index

Go Marshall Edgeworth Price Index = (Laspeyres Price Index+Paasche Price Index)/2

Dividend Growth Rate

Go Dividend Growth Rate = (Previous Year Dividend/Current Year Dividend)-1

Price to Cash Flow Ratio

Go Price to Cash Flow Ratio = Current Share Price/Operating Cash Flow

Margin Account Value

Go Margin Account Value = (Margin Loan)/(1-Maintenance Margin)

Sustainable Growth Rate

Go Sustainable Growth Rate = Retention Ratio*Return on Equity

Ev to Ebitda Ratio

Go Enterprise Value to Ebitda Ratio = Enterprise Value/EBITDA

Maximum Leverage Ratio

Go Maximum Leverage Ratio = 1/Initial Margin Requirement

Equal Weighting

Go Equal Weighting = 1/Number of Securities in the Index

Altman's Z Score Model Formula

Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales
ζ = 1.2*A+1.4*RE+3.3*C+0.6*D.+1.0*E

What is Altman's Z Score Model?

The Altman Z-Score model, developed by Edward Altman in the late 1960s, is a financial metric used to predict the likelihood of bankruptcy for publicly traded manufacturing companies. The model employs multiple financial ratios to assess a company's financial health and solvency, providing investors, creditors, and analysts with a quantitative tool for evaluating credit risk.
The Altman Z-Score model incorporates five financial ratios, weighted based on statistical analysis of bankrupt and non-bankrupt companies, to calculate a composite score. Companies with Z-Scores above a certain threshold (typically 2.6) are considered financially healthy and have a lower likelihood of bankruptcy, while those with Z-Scores below the threshold are considered financially distressed and may face higher bankruptcy risk.
The Altman Z-Score model is widely used by investors, lenders, and analysts to assess credit risk, make investment decisions, and monitor the financial health of companies.

How to Calculate Altman's Z Score Model?

Altman's Z Score Model calculator uses Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales to calculate the Zeta Value, Altman's Z Score Model is a quantitative financial tool used to assess the probability of bankruptcy for publicly traded manufacturing companies. Zeta Value is denoted by ζ symbol.

How to calculate Altman's Z Score Model using this online calculator? To use this online calculator for Altman's Z Score Model, enter Working Capital (A), Retained Earnings (RE), Earnings Before Interest and Taxes (C), Market Value of Equity (D.) & Total Sales (E) and hit the calculate button. Here is how the Altman's Z Score Model calculation can be explained with given input values -> 264300 = 1.2*60000+1.4*3500+3.3*40000+0.6*9000+1.0*50000.

FAQ

What is Altman's Z Score Model?

Altman's Z Score Model is a quantitative financial tool used to assess the probability of bankruptcy for publicly traded manufacturing companies and is represented as ζ = 1.2*A+1.4*RE+3.3*C+0.6*D.+1.0*E or Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales. Working Capital measures the liquidity and short-term financial health of a business, indicating the company's ability to meet its short-term obligations with its current assets, Retained Earnings represent the cumulative profits that a company has retained and reinvested into its business over time, rather than distributing them to shareholders as dividends, Earnings Before Interest and Taxes is a measure of a company's profitability that reflects its operating performance before considering the effects of interest expense and income taxes, Market Value of Equity is a financial metric that represents the total value of a company's outstanding shares of common stock in the open market & Total Sales represents the aggregate amount of money generated by a company from its primary business activities over a specific period.

How to calculate Altman's Z Score Model?

Altman's Z Score Model is a quantitative financial tool used to assess the probability of bankruptcy for publicly traded manufacturing companies is calculated using Zeta Value = 1.2*Working Capital+1.4*Retained Earnings+3.3*Earnings Before Interest and Taxes+0.6*Market Value of Equity+1.0*Total Sales. To calculate Altman's Z Score Model, you need Working Capital (A), Retained Earnings (RE), Earnings Before Interest and Taxes (C), Market Value of Equity (D.) & Total Sales (E). With our tool, you need to enter the respective value for Working Capital, Retained Earnings, Earnings Before Interest and Taxes, Market Value of Equity & Total Sales and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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