Formula to calculate Altman's
a + 1.4 b + 3.3 c + d
+ .6 f
= working capital,
= retained earnings,
= operating income,
= total assets,
= net worth and
= total debt
definition and explanation:
The Altman z-score is a bankruptcy
z-score 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 z-score ratio is listed
in our other
|The Altman z-score
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