ALTMAN’S

Z-Score Analysis
2011

ACI Limited
From Consolidated Financial Statements

Author

ABIR, MD. ZABER TAUHID

ID: 10-15556-1

Financial Statement Analysis

Section: A
American International University-Bangladesh

MD. ZABER TAUHID ABIR 1|Page

Altman’s “Z-Score”, the paramount recognized model of Financial Distress which uses several ratios to
generate a prediction of the likelihood of Bankruptcy. This model uses multiple discriminant analysis to
predict the Financial Distress.

According to the rules of calculating Z-Score, we need to find the Five Financial Ratios.

Where,

Z-Score of ACI Limited

Consolidated Financial Statements

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After calculating X1, X2, X3, X4 & X5 we are now able to analyze the Z-Score of the ACI Limited.

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Assessment:

Here we can perceive the ALTMAN’S Z-Score of ADVANCED CHEMICAL INDUSTRIES LIMITED (ACI),

which reveals the Financial Distress of the Company as a whole. ACI has the Z-Score of 1.57 which
reflects, the company is in the Ambiguous Position. On the other hand the entire company is not
solvent enough because the Working Capital figure of the company is showing negative, which is one of
the major factors in analyzing the Z-Score.

At the end of the analysis we can see, though the Z-Score of ACI is more than 1.20 which shows the
company has no high-risk of Bankruptcy, but the score 1.57 is not healthy enough for the company like
ACI. The company management has to take profound steps to get the desired score. With the present
condition the company is in the GRAY OR AMBIGUOUS AREA.

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