Infosys

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 LIABILITIES WORKING CAPITAL TOTAL ASSESTS WC/TA
2020 12,600.37 12,010.27 590.1 74,137.75 0.007959508
2021 10,719.56 9,257.85 1461.71 62,177.11 0.023508812
2022 11,507.79 8,959.29 2548.5 62,636.22 0.040687321
2023 8,638.23 6,724.36 1913.87 54,700.16 0.03498838
2024 8,309.37 7,569.29 740.08 49,578.94 0.014927306

X2

YEAR RETAINED EARNINGS TOTAL ASSETS RE/TA

2020 51,981.79 74,137.75 0.701151438
2021 46,726.01 62,177.11 0.751498582
2022 48,413.30 62,636.22 0.772928188
2023 42,759.53 54,700.16 0.781707585
2024 37,507.37 49,578.94 0.756518191

X3

YEAR OPERATING PROFIT Depreciation and EBIT(OP+DEP) TOTAL ASSETS EBIT/TA

Amortisation Expenses

2020 25,847.33 1215.06 27062.39 74,137.75 0.365028477

2021 26,576.07 1097.29 27673.36 62,177.11 0.445073115
2022 20,632.93 913.96 21546.89 62,636.22 0.344000484
2023 12,206.95 828.17 13035.12 54,700.16 0.238301314
2024 15,856.41 813.51 16669.92 49,578.94 0.336229859

X4

BOOK VALUE OF MKT OF

YEAR 0UTSTANDING SHARES SHARE PRICE MKT of EQUITY TOTAL ASSETS TOTAL LIABILITIES BOOK EQUITY DEBT BV OF DEBT IN CR. EQ/BV OF DB
2020 2,02,22,023 927.85 18763004040.55 74,137.75 10,357.18 63780.57 10357.18 103571800000.00 0.181159389
2021 2,02,12,022 1622.25 32788952689.50 62,177.11 8,870.41 53306.7 8870.41 88704100000.00 0.369644162
2022 2,02,02,021 1723.5 34818183193.50 62,636.22 9,994.47 52641.75 9994.47 99944700000.00 0.348374483
2023 2,01,92,020 2134.8 43105924296.00 54,700.16 14,175.13 40525.03 14175.13 141751300000.00 0.304095442
2024 2,01,82,019 2471.2 49873805352.80 49,578.94 6,596.96 42981.98 6596.96 65969600000.00 0.756011941

X5

YEAR TOTAL SALES TOTAL ASSETS TS/TA

2020 68,252 74,137.75 0.92061062
2021 76,404 62,177.11 1.228812339
2022 95,701 62,636.22 1.527885942
2023 1,17,627 54,700.16 2.150395904
2024 1,30,978 49,578.94 2.641807187

ALTMAN Z SCORE

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

2020 0.009551409 0.981612013 1.204593975 0.108695634 0.92061062 3.225063651
2021 0.028210575 1.052098015 1.468741278 0.221786497 1.228812339 3.999648704
2022 0.048824785 1.082099463 1.135201597 0.20902469 1.527885942 4.003036477
2023 0.041986056 1.09439062 0.786394336 0.182457265 2.150395904 4.255624181
2024 0.017912767 1.059125467 1.109558534 0.453607165 2.641807187 5.28201112

DECISION RULE: YEAR Z SCORE DECISION

2020 3.225063651 Firm is financially sound

If Z>2.99,Firm is 2021 3.999648704 Firm is financially sound
Financially sound.
If Z<1.81,Firm is 2022 4.003036477 Firm is financially sound
Financially Distressed or
Bankrupt.
2023 4.255624181 Firm is financially sound

2024 5.28201112 Firm is financially sound