Altman Z-Score Calculator
Predict bankruptcy probability using the Altman Z-Score model
Company Financials
Current Assets - Current Liabilities
Cumulative profits retained in business
Earnings Before Interest and Taxes
Stock price × shares outstanding
Current + Long-term liabilities
Annual revenue
Z-Score Analysis
Enter company financials and click Calculate
Z-Score analysis will appear here
About the Altman Z-Score
What is the Z-Score?
The Altman Z-Score, developed by Edward Altman in 1968, is a financial formula used to predict the probability of bankruptcy within two years. It combines five financial ratios weighted to maximize predictive accuracy. The model was originally developed for publicly-traded manufacturing companies and has ~80-90% accuracy.
The Five Components
X₁ - Liquidity: Working capital relative to total assets measures short-term financial health.
X₂ - Profitability: Retained earnings show cumulative profitability over time.
X₃ - Productivity: EBIT measures operational earning power.
X₄ - Leverage: Market value of equity vs. liabilities assesses financial structure.
X₅ - Activity: Asset turnover indicates efficiency.
Interpreting Results
Z > 2.99: Safe Zone - Company is unlikely to go bankrupt. Strong financial position.
1.81 < Z < 2.99: Grey Zone - Caution advised. Company should be monitored closely.
Z < 1.81: Distress Zone - High bankruptcy risk. Immediate attention required.
The model has been most reliable for manufacturing firms. Service and financial companies may need adjusted models.
Limitations & Considerations
The Z-Score should be used as one of several analytical tools, not in isolation:
- Best suited for publicly-traded manufacturers
- May not work well for startups or tech companies
- Does not account for industry-specific factors
- Should be analyzed over time for trends
- Requires accurate, current financial data
- Economic conditions affect interpretation
Where to Find Data
All required inputs can be found in a company's financial statements:
- Working Capital: Balance Sheet (Current Assets - Current Liabilities)
- Total Assets & Liabilities: Balance Sheet
- Retained Earnings: Balance Sheet under Shareholders' Equity
- EBIT: Income Statement (Operating Income)
- Market Value of Equity: Stock price × outstanding shares (from market data)
- Sales: Income Statement (Revenue or Net Sales)