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Z-Score Analysis Calculation-Private

 

Z-Score If Privately Held Firm
NOTE: Dr. Altman occasionally updates his Z-Score formulae.
We suggest checking his site routinely: Click Here

 
 
Check your Z-Score: How's your Fiscal Fitness?
This worksheet figures out the Z-Score for your company, which indicates financial health.

From Your Financial Statement You'll put in:

  • Earnings before taxes
  • Total assets
  • Net Sales
  • Book Value of Equity
  • Total Liabilities
  • Working Capital (Current  Assets minus Current Liabilities)
  • Retained Earnings 

The worksheet will indicate:

The short-term potential for financial problems at your company.

For more detail explanations and the formula see our two worksheets:
Altman Z-Score Analysis - Background and The Altman Z-Score Analysis

Please Note: If a firm's stock is not publicly traded, the (Market Value of Equity/Book Value of Debt) ratio cannot be calculated. To correct for this problem, the Z score can be re-estimated using book values of equity. Altman recommends the following alterations to the ratio weight factors.

Also Note: The z-score represents a point in time. As such, the z-scores should be examined over time. Consistently low scores each year are more of a concern than a one time low score.

We have preloaded some numbers for you. Click on Calculate Z-score to see the results. Then come back here and enter your numbers.

RATIO FORMULA WEIGHT FACTOR WEIGHTED RATIO
 
Return on Total Assets Earnings Before Interest and Taxes

Total Assets

x 3.107 ---
Sales to Total Assets Net Sales

Total Assets

x 0.998 ---
 
Equity to Debt Book Value of Equity

Total Liabilities

x 0.420 ---
 
Working Capital to Total Assets Working Capital

Total Assets

x .717 ---
Retained Earnings to Total Assets Retained Earnings

Total Assets

x .847 ---

 

KEY:

Z-SCORE ABOVE 2.90--YOU'RE IN GOOD SHAPE

Z-SCORE BETWEEN 2.90 and 1.23--WARNING SIGNS

Z-SCORE BELOW 1.23--BIG TROUBLE--COULD BE HEADING TOWARD BANKRUPTCY

 



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