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.

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