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Altman Z-Score

Assess a company's bankruptcy risk using the Altman Z-Score model — combines five financial ratios to predict financial distress.

Altman Z-Score Calculator

Calculate the Altman Z-Score to predict bankruptcy risk and assess company financial health using this proven financial distress prediction model.

Safe Zone: Z > 2.99

Gray Zone: 1.8 < Z < 2.99

Distress Zone: Z < 1.8

Financial Data Input

Balance Sheet Items

Working Capital ($)

Total Assets ($)

Retained Earnings ($)

Total Liabilities ($)

Income Statement Items

EBIT ($)

Sales Revenue ($)

Market Value of Equity ($)

Z-Score Results

A: Working Capital/Total Assets

B: Retained Earnings/Total Assets

C: EBIT/Total Assets

D: Market Value Equity/Total Liabilities

E: Sales/Total Assets

Interpretation

Bankruptcy Probability:

Altman Z-Score Formula

Z = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

A: Working Capital / Total Assets

B: Retained Earnings / Total Assets

C: Earnings Before Interest and Taxes / Total Assets

D: Market Value of Equity / Total Liabilities

E: Sales / Total Assets

Risk Zones

Safe Zone (Z > 2.99)

Low bankruptcy risk. Company is financially healthy.

Gray Zone (1.8 < Z < 2.99)

Moderate risk. Requires careful monitoring.

Distress Zone (Z < 1.8)

High bankruptcy risk. Immediate attention required.

Note: The Altman Z-Score was originally developed for manufacturing companies. Modified versions exist for service companies and non-public companies.

Usage Tips

Data Requirements

• Use most recent annual financial statements
• Ensure data consistency across all inputs
• Working Capital = Current Assets - Current Liabilities
• EBIT excludes interest and tax expenses

Limitations

• Originally designed for manufacturing firms
• May not apply well to service companies
• Should be used with other financial metrics
• Market conditions can affect accuracy