The Altman Z-Score: A Predictor for Bankruptcy

Is a company you work with headed toward bankruptcy? The Altman Bankruptcy Predictor Model, developed by Edward I. Altman, has proved to be a reliable test of corporate financial health. By using a combination of customary financial ratios and a statistical technique known as discriminant analysis, a model can be established for predicting the likelihood of bankruptcy or liquidation.

To determine the Z-Score for any company, you must enter the specific financial data requested:

• Earnings Before Taxes
• Total Assets
• Net Sales (not applicable for Private Non-Manufacturing)
• Market or Book Value of Equity
• Total Liabilities or Book Value of Total Debt
• Working Capital (Current Assets minus Current Liabilities)
• Retained Earnings

The worksheet will indicate the short-term potential for financial problems at the company.

Select Type of Business	Public Private Manufacturing Private Non-Manufacturing