Reliance Industries 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 LIABILITIES WORKING CAPITAL TOTAL ASSESTS WC/TA
2019 9,441.29 5,099.64 4341.65 3,14,686.20 0.01379676
2020 7,615.74 5,129.79 2485.95 2,73,336.99 0.009094817
2021 7,150.76 4,238.37 2912.39 2,26,830.44 0.012839502
2022 5,821.31 3,022.30 2799.01 1,65,580.19 0.016904256
2023 6,641.41 3,736.01 2905.4 1,46,733.85 0.019800475

X2

YEAR RETAINED EARNINGS TOTAL ASSETS RE/TA

2019 12,016.59 3,14,686.20 0.038185945
2020 10,620.74 2,73,336.99 0.038855846
2021 12,126.76 2,26,830.44 0.053461784
2022 7,743.06 1,65,580.19 0.046763203
2023 6,576.36 1,46,733.85 0.044818288

X3

Depreciation and
YEAR OPERATING PROFIT Amortisation Expenses EBIT(OP+DEP) TOTAL ASSETS EBIT/TA
2019 66,581.00 67.79 66648.79 3,14,686.20 0.211794448
2020 58,432.29 0.14 58432.43 2,73,336.99 0.213774323
2021 49,768.28 0.21 49768.49 2,26,830.44 0.219408339
2022 40,324.01 0.39 40324.4 1,65,580.19 0.243533964
2023 32,890.35 0.62 32890.97 1,46,733.85 0.224153936

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
2019 1,00,08,94,759 961.6 962460400254.40 3,14,686.20 5,099.64 309586.56 5099.64 50996400000.00 18.87310477
2020 1,00,03,70,562 904.25 904585080688.50 2,73,336.99 5,129.79 268207.2 5129.79 51297900000.00 17.6339593
2021 1,00,00,70,908 1196 1196084805968.00 2,26,830.44 4,238.37 222592.07 4238.37 42383700000.00 28.22039619
2022 1,00,00,26,295 1231.3 1231332377033.50 1,65,580.19 3,022.30 162557.89 3022.3 30223000000.00 40.74156692
2023 1,00,00,00,000 1432.6 1432600000000.00 1,46,733.85 3,736.01 142997.84 3736.01 37360100000.00 38.34572177

X5

YEAR TOTAL SALES TOTAL ASSETS TS/TA

2019 44,604 3,14,686.20 0.141741201
2020 43,798 2,73,336.99 0.160234442
2021 81,913 2,26,830.44 0.361119963
2022 82,983 1,65,580.19 0.501165025
2023 80,636 1,46,733.85 0.549539183

ALTMAN Z SCORE

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

2019 0.016556112 0.053460323 0.698921678 11.32386286 0.141741201 12.23454218
2020 0.010913781 0.054398184 0.705455266 10.58037558 0.160234442 11.51137725
2021 0.015407403 0.074846498 0.724047518 16.93223771 0.361119963 18.10765909
2022 0.020285108 0.065468484 0.803662081 24.44494015 0.501165025 25.83552085
2023 0.023760571 0.062745604 0.739707988 23.00743306 0.549539183 24.38318641

DECISION RULE: YEAR Z SCORE DECISION

2019 12.23454218 Firm is financially sound
If Z>2.99,Firm is
Financially sound. 2020 11.51137725 Firm is financially sound
If Z<1.81,Firm is
Financially Distressed or
Bankrupt. 2021 18.10765909 Firm is financially sound
2022 25.83552085 Firm is financially sound
2023 24.38318641 Firm is financially sound