ALTMAN Z-SCORE (Private Firms): 
Online Z'-Score Calculator (for Private Firms)
The Revised Model (A Variation Adapted for Private Firms)
This score uses statistical techniques to predict a private firm's probability of failure using the following 8 variables from its' financial statements:
{For Z' Score, the following 8 inputs are essential: {Current Assets; Current Liabilities; Total Liabilities; EBIT; Total Assets; Net Sales; Retained Earnings; Book Value of Equity}
The 5 financial ratios in the Altman Z'-Score for Private Firms and their respective weight factors are as follows:
|
RATIO
|
WEIGHTAGE
|
||
|
A
|
EBIT/Total Assets
|
x. 3.107
|
-4 to +8.0
|
|
B
|
Net Sales /Total Assets
|
x 0.998
|
-4 to +8.0
|
|
C
|
Book Value of Equity / Total Liabilities
|
x 0.420
|
-4 to +8.0
|
|
D
|
Working Capital/Total Assets
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x 0.717
|
-4 to +8.0
|
|
E
|
Retained Earnings /Total Assets
|
x0.847
|
-4 to +8.0
|
These ratios are multiplied by the weightage as above, and the results are added together.
Altman Z'-Score (for Private Firms) = (A x 3.107) + (B x 0.998) + (C x 0.420) + (D x 0.717) + (E x 0.847)
The Interpretation of Z' Score:
Z'-SCORE ABOVE 2.9 - The company is deemed Safe based on the given financial figures only.
Z'-SCORE BETWEEN 1.23 and 2.9 - On Alert. This is the grey zone and one should exercise Caution.
Z'-SCORE BELOW 1.23 - Probability of Financial Embarassment is very High.