5.19 Using Valuation Tutor’s Altman
Model Calculator
R4 = Shareholders’
Equity/Total Liabilities or Market Value of Equity/Total
Liabilities
The choice of this variable is important and the default in
Valuation Tutor is to use the traditional measure.
However, for the case of P&G the traditional measure
provides a rating that is out of line with a ratio analysis of
P&G which are all relatively strong.
Using Market Prices results in a more realistic “A.”
To reconcile this we will need to access P&G’s two major
statements: The
Consolidated Income Statement and the Consolidated Balance
Sheet. We can do
this by first setting up the screen as described in section 5.2:
