Tata Consultancy Limited

Banking Management
ALTMAN Z-SCORE - Altman’s Z-Score model is a numerical measurement that is used to predict the chances of a business going bankrupt in the next two
years. The model was developed by American finance professor EdwardAltman in 1968 as a measure of the financial stability of companies

Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + l.0X5

X1 = working capital/total assets (%)
X2 = retained earnings/total assets (%)
X3 = EBIT/total assets (%)
X4 = market value of equity/book value of debt (%)
X5 = sales/total assets (times)

CALCULATIONS:

X1

YEAR CURRENT ASSESTS CURRENT LIABILITIESWORKING CAPITAL TOTAL ASSESTS WC/TA

2020 1,46,097.91 2,10,793.21 -64695.3 4,57,240.62 -0.14149071
2021 1,49,788.66 2,00,960.59 -51171.93 4,19,956.09 -0.121850668
2022 1,37,321.82 1,81,297.79 -43975.97 3,88,339.10 -0.11324116
2023 1,09,984.89 1,50,813.84 -40828.95 3,34,054.08 -0.122222575
2024 1,06,152.86 1,52,906.80 -46753.94 3,11,090.56 -0.150290449

X2

YEAR RETAINED EARNINGS TOTAL ASSETS RE/TA

2020 1,62,943.42 4,57,240.62 0.356362521
2021 1,20,985.98 4,19,956.09 0.288091976
2022 1,22,105.32 3,88,339.10 0.314429631
2023 1,01,319.00 3,34,054.08 0.30330119
2024 84,587.83 3,11,090.56 0.271907415

X3

Depreciation and
Amortisation
YEAR OPERATING PROFIT Expenses EBIT(OP+DEP) TOTAL ASSETS EBIT/TA
2020 8,66,345.38 14509.6 880854.98 4,57,240.62 1.926458284
2021 9,30,996.67 11859.44 942856.11 4,19,956.09 2.245130223
2022 7,24,602.11 11005.91 735608.02 3,88,339.10 1.89424145
2023 5,11,813.99 9804.3 521618.29 3,34,054.08 1.561478579
2024 5,62,168.72 8766.1 570934.82 3,11,090.56 1.835268868

X4

BOOK BOOK VALUE MKT OF

YEAR 0UTSTANDING SHARESSHARE PRICE MKT of EQUITY TOTAL ASSETS TOTAL LIABILITIESEQUITY OF DEBT BV OF DEBT IN CR. EQ/BV OF DB
2020 13,77,15,60,699 170.36 2346123080681.64 4,57,240.62 2,10,793.21 246447.41 210793.21 2107932100000.00 1.112997464
2021 9,18,10,40,466 129.85 1192158104510.10 4,19,956.09 2,00,960.59 218995.5 200960.59 2009605900000.00 0.593229799
2022 9,18,10,40,466 76.5 702349595649.00 3,88,339.10 1,81,297.79 207041.31 181297.79 1812977900000.00 0.38740108
2023 9,18,10,40,466 74.33 682426737837.78 3,34,054.08 1,50,813.84 183240.24 150813.84 1508138400000.00 0.452496096
2024 9,18,10,40,466 60.63 556646483453.58 3,11,090.56 1,52,906.80 158183.76 152906.8 1529068000000.00 0.364042988

X5

YEAR TOTAL SALES TOTAL ASSETS TS/TA

2020 4,83,763 4,57,240.62 1.058005301
2021 3,63,950 4,19,956.09 0.866638224
2022 5,89,321 3,88,339.10 1.517542272
2023 8,41,756 3,34,054.08 2.519819545
2024 7,76,352 3,11,090.56 2.495581994

ALTMAN Z SCORE

YEAR X1*1.2 X2*1.4 X3*3.3 X4*0.6 X5*1.0 ALTMAN Z SCORE

2020 -0.169788852 0.498907529 6.357312336 0.667798478 1.0580053 8.412234793
2021 -0.146220801 0.403328767 7.408929736 0.35593788 0.86663822 8.888613805
2022 -0.135889392 0.440201484 6.250996786 0.232440648 1.51754227 8.305291798
2023 -0.146667091 0.424621666 5.152879309 0.271497657 2.51981955 8.222151088
2024 -0.180348539 0.380670381 6.056387265 0.218425793 2.49558199 8.970716894

DECISION RULE: YEAR Z SCORE DECISION

2019 8.412234793 Firm is financially sound
If Z>2.99,Firm is
Financially sound. 2020 8.888613805 Firm is financially sound

If Z<1.81,Firm is
Financially Distressed
or Bankrupt. 2021 8.305291798 Firm is financially sound
2022 8.222151088 Firm is financially sound
2023 8.970716894 Firm is financially sound