Formula to calculate Altman's
ZScore:
zscore
= 1.2
a + 1.4 b + 3.3 c + d
+ .6 f
e
g
where
:
a
= working capital,
b
= retained earnings,
c
= operating income,
d
= sales,
e
= total assets,
f
= net worth and
g
= total debt
Altman zscore
definition and explanation:
The Altman zscore is a bankruptcy
prediction calculation.
The
zscore measures the probability of insolvency (inability to pay debts as
they become due).
1.8 or less indicates a very high probability of insolvency.
1.8 to 2.7 indicates a high probability of insolvency.
2.7 to 3.0 indicates possible insolvency.
3.0 or higher indicates that insolvency is not likely.
The Altman z  score is included in
the financial statement ratio analysis spreadsheets
highlighted in the left column, which provide
formulas, definitions, calculation, charts and
explanations of each ratio.
The Altman zscore ratio is listed
in our other
accounting ratios.
The Altman zscore
and other ratios are key to understanding
financial statements. Our ratio calculation
spreadsheets reduce time and effort in
calculating decision making ratios. They
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Spreadsheets to
calculate ratios (includes formulas,
definitions,
explanations and charts):
See list
of ratios , or the financial statement ratio
analysis spreadsheets which are not highlighted in the
left column, to see which other ratios our spreadsheets
calculate, define and explain.
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to order 16 ratio
calculator spreadsheet (including Altman Zscore and
$250 in Coupons) for $60.
The Altman Zscore
may be included in our
custom 1, 3 or 5 period financial
statement ratio analysis spreadsheet.
