Altman’s Z-Score is a measure that indicates the probability of a company filing for bankruptcy within the next two years. The higher the value, the lower the probability of bankruptcy. A score below 1.8 indicates bankruptcy is imminent, while a score above 3 indicates bankruptcy is unlikely. Altman’s Z-Score is only available for publicly listed companies with all the required financial data for the model. The formula for Altman’s Z-Score is:
Altman’s Z-Score = 1.2 * (Working Capital / Tangible Assets) + 1.4 * (Retained Earnings / Tangible Assets) + 3.3 * (TTM EBIT / Tangible Assets) + 0.6 * (Market Value of Equity / Total Liabilities) + (TTM Sales / Tangible Assets)
Where:
- Working Capital is R0135,
working_capital
- Tangible Assets is R0131,
tangible_assets
- Retained Earnings is BS068,
bs_pure_retained_earnings
- TTM EBIT is TM008,
ttm_oper_inc
- Market Value of Equity is R0066,
market_cap
- Total Liabilities is BS062,
bs_tot_liab
- TTM Sales is TM006,
ttm_net_sales