Two figures in, a clear answer out. The altman z score calculator uses accounts receivable, accounts payable, dividend per share, earnings before interest and tax (ebit), inventory, net income, number of shares outstanding, sales, share price, total assets, total liabilities and one way to produce market value of equity, net working capital and net working capital, applying the standard relationship for this problem in the order the calculation actually needs it.
What Is the Altman Z Score Calculator?
The altman z score calculator takes accounts receivable, accounts payable, dividend per share, earnings before interest and tax (ebit), inventory, net income, number of shares outstanding, sales, share price, total assets, total liabilities and one way and turns them into market value of equity, net working capital and net working capital.
It is the kind of calculation you would otherwise do on the back of an envelope: mechanical, repeatable and easy to get subtly wrong without noticing.
How the Altman Z Score Figure Is Built
Each result is calculated from the ones before it, so the working is fully visible. That matters when the answer is going to be quoted to somebody else and you need to be able to explain where it came from.
The figures are exactly as good as the assumptions underneath them. Check the rates, the periods and the tax treatment before you rely on the result.
Reading the Result Sensibly
A small change in an input can move the result by much more than you would expect, particularly where the calculation divides by one of the figures you supplied. That is worth understanding before you rely on a figure.
For anything that will be committed to, write the inputs down beside the result. A number you can reproduce is worth far more than one you cannot explain.
A Worked Example
Working through an example, with accounts receivable set to 10, accounts payable set to 5, dividend per share set to 2, the calculator returns net working capital of 15, and market value of equity of 20, and retained earnings of 1. Substitute your own figures and the same steps produce the same kind of answer.
Frequently Asked Questions
What do I need to work out market value of equity?
Enter accounts receivable, accounts payable, dividend per share, earnings before interest and tax (ebit), inventory, net income, number of shares outstanding, sales, share price, total assets, total liabilities and one way. The calculator then works through the relationship and reports market value of equity, net working capital and net working capital.
What does the altman z score actually calculate?
It takes accounts receivable, accounts payable, dividend per share, earnings before interest and tax (ebit), inventory, net income, number of shares outstanding, sales, share price, total assets, total liabilities and one way and converts them into market value of equity, net working capital and net working capital using the standard relationship for this problem. Each step is applied in turn, so every output is traceable back to the numbers you typed in.
How should I enter accounts receivable?
Use the value you actually have, in the unit shown next to the field. Enter every value in the same unit system. The calculator assumes the figures you supply are consistent, so it cannot correct a mistake that happens before the calculation starts.
Why does a small change in one value move the answer so much?
That happens when an output depends on a ratio, because dividing by a small number magnifies any change in it. Check the units first, then check whether the value you entered is in the range the relationship was designed for.
Is the answer exact?
It is as exact as the formula and the inputs allow. The method itself is the standard one for this problem, so the only sources of error are the figures you enter and the precision you ask for.