Finance

Altman Z-Score Calculator

Predict corporate bankruptcy risk using Edward Altman's original five-ratio model.

Working Capital ($)

Total Assets ($)

Retained Earnings ($)

EBIT ($)

Market Cap (Equity MV) ($)

Total Liabilities ($)

Sales / Revenue ($)

Altman Z-Score Formula (Public Manufacturing):
Z = 1.2×X1 + 1.4×X2 + 3.3×X3 + 0.6×X4 + 1.0×X5
X1=WC/TA, X2=RE/TA, X3=EBIT/TA, X4=MV Equity/TL, X5=Sales/TA

Understanding the Altman Z-Score

Developed by Edward Altman in 1968, the Z-Score is a formula that predicts the probability of a company going bankrupt within two years. It combines five financial ratios weighted to produce a single score.

Interpreting the Score

Z-Score	Zone	Interpretation
Above 2.99	Safe	Low bankruptcy risk
1.81 – 2.99	Grey	Moderate risk — caution advised
Below 1.81	Distress	High bankruptcy risk

The Five Ratios

X1 (WC/TA): Liquidity — measures net liquid assets relative to total assets
X2 (RE/TA): Profitability — cumulative profitability over time
X3 (EBIT/TA): Operating efficiency — true productivity of assets
X4 (MV/TL): Solvency — market confidence vs total debt
X5 (Sales/TA): Activity — asset turnover efficiency