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Altman Formula

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Altman Formula


1. **State the problem:** Calculate the value of the expression using the Altman formula components given: $$1.2 \times 0.02216 + 1.4 \times 0.3409 + 3.3 \times 0.0733 + 0.6 \times 2.710417 + 1.0 \times 0.000000002611960$$ 2. **Recall the formula:** The Altman Z-score formula is a weighted sum of financial ratios, where each ratio is multiplied by a coefficient and then summed. 3. **Calculate each term:** - $1.2 \times 0.02216 = 0.026592$ - $1.4 \times 0.3409 = 0.47726$ - $3.3 \times 0.0733 = 0.24189$ - $0.6 \times 2.710417 = 1.6262502$ - $1.0 \times 0.000000002611960 = 0.000000002611960$ 4. **Sum all terms:** $$0.026592 + 0.47726 + 0.24189 + 1.6262502 + 0.000000002611960 = 2.37199220261196$$ 5. **Final answer:** The calculated value using the Altman formula components is approximately **2.372**.