“Z- score”
Date calculated 16-Sep-04
Company Lucent
Data used 10Q + extrapolation
Data input
Working Capital = Current Assets – Current Liabilities
Current Assets $7,483
Current Liabilities $5,011
Working Capital $2,472
Total Assets $15,970
Retained Earnings $1,000
Operating Income $1,000
Market Cap. + preferred stock $12,000
Total Debt $5,000
Sales $8,600
Z- score Results 2.51
What are the chances of bankruptcy ?
1.80 or less Very High
1.81 to 2.7 High
2.8 to 2.9 Possible
3.0 or higher Not Likely
Formulas Used
(Working Capital / Total Assets * 1.2 ) 0.19
+ ( Retained Earnings/ Total Assets * 1.4) 0.09
+ (Operating Income/Total Assets * 3.3 ) 0.21
+ (Market Value of Common and preferred Stock / Total Debt * .6 ) 1.44
+ (Sales / Total Assets * 1.1 ) 0.59
Score Probability of Short-term illiquidity 2.51
Here is a site which describes altman z scores with calculators