Altman Z Score Formula in Excel

The Altman Z Score formula in Excel is a powerful valuation function offered by MarketXLS. It provides a numerical indicator that assesses the likelihood of bankruptcy for a company—commonly used in manufacturing sectors but also applicable more broadly. By leveraging this function, traders, analysts, and investors can quickly gauge a firm's financial stability and make more informed decisions.

Understanding Altman Z Score

• Purpose: The Altman Z Score is designed to measure the financial health of a company by assessing various balance sheet and income data points.
• Key Benefits:
  • Identifies a firm’s risk profile.
  • Offers a straightforward, numerical measure for quick evaluation.
  • Integrates seamlessly with your Excel workflow via MarketXLS.
• When to Use:
  • Analyzing manufacturing or industrial companies.
  • Conducting fundamental research for investment decisions.
  • Evaluating a company’s long-term viability.

Syntax and Parameters

=AltmanZScore(Symbol)

• Return Value:
  • Returns a numeric score that reflects the company’s financial health.
  • Returns "NA" if the symbol is invalid, if you have an invalid license, or if there is an error.

?? Note: An active internet connection and a valid MarketXLS license are required for this function to retrieve live data.

? Pro Tip: The Altman Z Score is a widely recognized indicator but should be used alongside other valuation metrics, such as the DCF Valuation or the Ben Graham Model Valuation, for a more comprehensive analysis.

Examples and Usage

1. Basic Example

   =AltmanZScore("MSFT")

   Returns the Altman Z Score for Microsoft’s stock.

2. Index Example

   =AltmanZScore("^SPX")

   Although typically used for specific companies, you can reference an index symbol to see if any data is available.

3. Options Example

   =AltmanZScore("@MSFT 110122C00020000")

   If supported, some option tickers can also be analyzed if MarketXLS provides relevant data.

4. Cell Reference

   =AltmanZScore(A1)

   Use the value in cell A1 to dynamically change the symbol you’re analyzing.

?? Note: The function call may be slower when evaluating multiple symbols simultaneously because it fetches data from external servers.

Common Questions

1. Why am I getting "NA"?

   • Ensure the symbol is valid and spelled correctly.
   • Check your internet connection and MarketXLS license status.
   • The company or index might not have sufficient data for calculation.

2. Does the Altman Z Score work for all sectors?

   • It was initially designed for manufacturing firms, but analysts often apply it more broadly. Interpretation should be tailored to the sector.

3. How often is the data refreshed?

   • MarketXLS typically updates data regularly, but frequency can depend on your subscription plan.

4. Are there performance considerations?

   • Because the function retrieves data from an external API, large-scale usage in a single spreadsheet could affect performance. Consider using data caching or limiting the number of simultaneous requests.

? Pro Tip: Combine the Altman Z Score with other valuation functions—such as the Gordon Model Valuation, DCF Valuation, Ben Graham Model Valuation, Capitalisation Of Earnings Model Valuation, and Liquidation Value—to gain deeper insights and mitigate the limitations of any single metric.