Z-Score Help
This calculator uses the following formula:
Z-Score = 1.2 * X1 + 1.4 * X2 + 3.3 * X3 + 0.6 * X4 + 0.999 * X5Where:
- X1 = Working Capital / Total Assets
- X2 = Retained Earnings / Total Assets
- X3 = Earnings before Interest and Taxes / Total Assets
- X4 = Market Value of Equity / Book Value of Debt
- X5 = Sales / Total Assets
Edward Altman came up with the Altman Z-Score to create a statistical technique to predict the probability of a company's financial failure.
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