Altman Z-Score
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CAUTION: The Altman Z-Score is meant to be applied only to manufacturing firms that are near bankruptcy. It was not based on a sample including non-manufacturing firms (service firms, banks, etc.). Use it at your own risk with those companies, but beware that bankruptcy probabilities may be misstated.
The Altman Z-Score helps investors to gauge the probability of a company going bankrupt. Generally, firms with a score above 3.00 have a low probability of bankruptcy, and those with a Z-Score of less than 1.81 have a relatively high probability of bankruptcy.
Note that this is a probabilistic model, so it will not classify perfectly.
The score was first published in a 1968 paper by Edward Altman titled "Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy."
Altman re-tested the model in a 2000 paper titled "Predicting financial distress of companies: Revisiting the Z-score and Zeta models". The paper showed that the model still had utility for looking at manufacturers, though the number of misclassifications did increase over time.
Formula
Z = 1.2 x (Working Capital / Total Assets) + 1.4 x (Retained Earnings / Total Assets) + 3.3 x (Earnings Before Interest and Taxes / Total Assets) + 0.6 x (Market Value of Equity / Total Liabilities) + 1.0 x (Sales / Total Assets)
Where:
Working Capital = Current Assets - Current Liabilities
Market Value of Equity = Market Cap + Preferred Stock
YCharts calculates according to this formula.
Recent Quotes
| Symbol | Price | Chg | Chg % | Market Cap |
|---|---|---|---|---|
| XIN | 2.68 | -0.19 | -6.62% | 206.17M |
| XIDE | 2.29 | -0.03 | -1.29% | 178.89M |
| XHE | 52.27 | -1.10 | -2.07% | |
| XG | 2.95 | +0.15 | +5.36% | 283.67M |
| XEL | 27.96 | -0.06 | -0.21% | 13.61B |
| XEC | 51.29 | -1.98 | -3.72% | 4.396B |
| XCO | 6.90 | -0.30 | -4.17% | 1.495B |
| XBKS | 4.15 | +0.00 | +0.00% | 43.37M |
| XBI | 78.30 | -2.14 | -2.66% | |
| XATA | 0.81 | +0.05 | +6.56% | 8.651M |
