Run this calculation to determine your company's financial strength and viability:
Creditors and financial analysts will use a 'modified' Z-Altman Score for private businesses to assess financial strength. Five ratios are weighted, and then added together to arrive at a credit worthiness score. A score of 1.1 or below suggests bankruptcy. Between 1.1 - 2.6 is labeled 'heavy concern' at lower end, to 'monitor' towards the upper end 2.6.
A score above 2.6 suggests your business is in excellent financial condition.
Here is the ratio:
(WorkingCap/Assets)*.717 + (Retained Earnings/Assets)*.847 + (EBIT/Assets)*3.107 + (BookEquity/Liab)*.42 + (Sales/Assets)*.998 = ? for your business.
Notice the heavy weighting on 1 of the 5 ratios - (EBIT/Assets)- which is mutiplied by 3.107, while the other ratios are discounted slightly.