Altman Z-Score Calculator

Calculate the Altman Z-Score for any company. Assess bankruptcy risk, financial health, and creditworthiness instantly with this proven financial model.

Altman Z-Score Calculator | Bankruptcy Prediction Model
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The Altman Z-Score predicts bankruptcy risk. Z > 2.99 = Safe Zone, 1.81-2.99 = Grey Zone, Z < 1.81 = Distress Zone.

Altman Z-Score Analysis
📊 Z-Score: —
1.81 (Distress) 2.99 (Safe)
Working Capital—
X1: Working Capital / Total Assets—
X2: Retained Earnings / Total Assets—
X3: EBIT / Total Assets—
X4: Market Value Equity / Total Liabilities—
X5: Sales / Total Assets—
Altman Z-Score—
Z-Score Component Breakdown
ComponentValueWeightContribution

Enter financial data to view breakdown.

Shows how each ratio contributes to the final Altman Z-Score.

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Creator & Reviewer

Hasnain Khan

Co-Founder, Techraxy

Hasnain Khan is a digital tools developer and Co-Founder of Techraxy, a platform dedicated to building modern web-based calculators and utility tools. He focuses on tool optimization, website performance, and creating accessible user experiences across categories like automotive, finance, construction, and everyday utilities.

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Introduction to Altman Z-Score Calculator

The Altman Z-Score is a widely used financial model developed by Edward Altman in 1968 to predict the likelihood of corporate bankruptcy. It combines five key financial ratios into a single score that indicates a company’s financial health. Originally designed for manufacturing companies, the model has been adapted for private companies, non-manufacturers, and emerging markets. This Altman Z-Score Calculator helps you assess the bankruptcy risk of any company. Enter financial data including working capital, retained earnings, EBIT, market value of equity, total assets, total liabilities, and sales. The calculator produces a Z-Score and classifies the company as safe, grey zone, or distress. Toolraxy built this calculator to help investors, analysts, and business owners evaluate financial stability objectively.

How to Use This Altman Z-Score Calculator

            1. Enter Working Capital (current assets minus current liabilities)

            2. Enter Total Assets (from the balance sheet)

            3. Enter Retained Earnings (cumulative profits retained)

            4. Enter EBIT (earnings before interest and taxes)

            5. Enter Market Value of Equity (shares outstanding × share price)

            6. Enter Total Liabilities (short-term + long-term)

            7. Enter Total Sales (annual revenue)

            8. Click Calculate to see your Altman Z-Score

            9. Review the risk zone and component ratios

Formula Section

Original Z-Score formula (public manufacturing companies):

text
Z = 1.2(X1) + 1.4(X2) + 3.3(X3) + 0.6(X4) + 1.0(X5)

Component ratios:

text
X1 = Working Capital ÷ Total Assets
X2 = Retained Earnings ÷ Total Assets
X3 = EBIT ÷ Total Assets
X4 = Market Value of Equity ÷ Total Liabilities
X5 = Total Sales ÷ Total Assets

Altman Z-Score interpretation:

  • Z > 2.99 = Safe Zone (low bankruptcy risk)

  • 1.81 < Z < 2.99 = Grey Zone (moderate risk)

  • Z < 1.81 = Distress Zone (high bankruptcy risk)

Variants:

text
Z' (private companies) = 0.717(X1) + 0.847(X2) + 3.107(X3) + 0.420(X4) + 0.998(X5)
Z'' (non-manufacturers) = 6.56(X1) + 3.26(X2) + 6.72(X3) + 1.05(X4)

Where:

  • X1 = Liquidity measure

  • X2 = Profitability and age measure

  • X3 = Operating efficiency

  • X4 = Solvency measure

  • X5 = Asset turnover

Real-Life Examples Section

Example scenario:

  • Working capital: $2,000,000

  • Total assets: $10,000,000

  • Retained earnings: $3,000,000

  • EBIT: $1,500,000

  • Market value of equity: $6,000,000

  • Total liabilities: $4,000,000

  • Total sales: $12,000,000

Calculations:

  • X1 = $2,000,000 ÷ $10,000,000 = 0.20

  • X2 = $3,000,000 ÷ $10,000,000 = 0.30

  • X3 = $1,500,000 ÷ $10,000,000 = 0.15

  • X4 = $6,000,000 ÷ $4,000,000 = 1.50

  • X5 = $12,000,000 ÷ $10,000,000 = 1.20

Weighted components:

  • 1.2 × X1 = 1.2 × 0.20 = 0.24

  • 1.4 × X2 = 1.4 × 0.30 = 0.42

  • 3.3 × X3 = 3.3 × 0.15 = 0.495

  • 0.6 × X4 = 0.6 × 1.50 = 0.90

  • 1.0 × X5 = 1.0 × 1.20 = 1.20

Altman Z-Score:

  • Z = 0.24 + 0.42 + 0.495 + 0.90 + 1.20 = 3.255

Risk assessment:

  • Z-Score = 3.255

  • Safe Zone (above 2.99)

  • Low bankruptcy risk

  • Strong financial health

Scenario comparison:

  • Z = 3.5: Strong safe zone

  • Z = 2.5: Grey zone (moderate risk)

  • Z = 1.5: Distress zone (high risk)

Clear takeaway: This manufacturing company has a Z-Score of 3.255, placing it in the safe zone. The strong components are market equity relative to liabilities (X4) and asset turnover (X5). Investors can have confidence in the company’s financial stability.

 

FAQs

1. What is the Altman Z-Score?
The Altman Z-Score is a financial model developed by Edward Altman in 1968 to predict the likelihood of corporate bankruptcy. It combines five financial ratios into a single score that indicates financial health.

2. How is the Altman Z-Score calculated?
Z = 1.2(X1) + 1.4(X2) + 3.3(X3) + 0.6(X4) + 1.0(X5), where X1 to X5 are ratios of working capital, retained earnings, EBIT, market equity, and sales relative to total assets or liabilities.

3. What does a Z-Score of 3 mean?
A Z-Score above 2.99 is considered the safe zone, indicating low bankruptcy risk. A Z-Score of 3 indicates strong financial health and low probability of default.

4. What is a good Altman Z-Score?
A Z-Score above 2.99 is considered good (safe zone). Between 1.81 and 2.99 is the grey zone (moderate risk). Below 1.81 is the distress zone (high risk).

5. What are the five components of the Altman Z-Score?
X1 = Working Capital/Total Assets, X2 = Retained Earnings/Total Assets, X3 = EBIT/Total Assets, X4 = Market Value of Equity/Total Liabilities, X5 = Total Sales/Total Assets.

6. What is the difference between the original and Z”-Score?
The original Z-Score is for public manufacturing companies. The Z”-Score is adapted for non-manufacturers and emerging markets, using different coefficients for the same ratios.

7. Can the Altman Z-Score predict all bankruptcies?
No. The model has approximately 80-90% accuracy in predicting bankruptcy within one year. It does not account for industry-specific factors or market conditions.

8. Is the Altman Z-Score useful for private companies?
Yes, there is a variant for private companies (Z’-Score) that uses book value of equity instead of market value. This calculator can be adapted for private companies by adjusting the input.

Disclaimer

This Altman Z-Score Calculator is provided for educational and planning purposes only. Results are based on Altman’s published formulas and the numbers you enter. The Z-Score is a screening tool, not a definitive predictor of bankruptcy. Actual financial outcomes depend on many factors including market conditions, management quality, and industry dynamics. This tool does not constitute financial or investment advice. Consult a licensed financial analyst or investment professional before making investment decisions. Toolraxy is not responsible for any actions taken based on these calculations.

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