Altman Z-Score Calculator

Enter your company's key financial figures — Total Assets, Total Current Assets, Total Current Liabilities, Retained Earnings, EBIT, Market Value of Equity, Total Liabilities, and Net Sales — to calculate the Altman Z-Score. Select your company type (public manufacturing, private, or non-manufacturing) to apply the correct model. You'll get your Z-Score value plus a bankruptcy risk interpretation (Safe Zone, Grey Zone, or Distress Zone).

Select the model that matches your company type. Each uses different coefficients.

Cash, receivables, inventory, and other short-term assets.

Sum of all assets on the balance sheet.

Short-term obligations due within one year.

All short-term and long-term liabilities.

Cumulative earnings retained in the business after dividends.

For public firms: shares outstanding × stock price. For private firms: use book value of equity.

Operating profit before interest and tax expenses.

Total revenue from operations for the period.

Results

Altman Z-Score

--

Risk Assessment

--

X1 — Working Capital / Total Assets

--

X2 — Retained Earnings / Total Assets

--

X3 — EBIT / Total Assets

--

X4 — Market Value of Equity / Total Liabilities

--

X5 — Net Sales / Total Assets

--

Z-Score Component Contributions

Frequently Asked Questions

What is the Altman Z-Score?

The Altman Z-Score is a financial model developed by Professor Edward Altman in 1968 to predict the probability of a company going bankrupt within two years. It combines five financial ratios into a single weighted score using discriminant analysis. It is widely used by credit analysts, lenders, and investors to assess corporate financial health.

How is the Altman Z-Score calculated?

The original public company formula is: Z = 1.2×X1 + 1.4×X2 + 3.3×X3 + 0.6×X4 + 1.0×X5, where X1 = Working Capital/Total Assets, X2 = Retained Earnings/Total Assets, X3 = EBIT/Total Assets, X4 = Market Value of Equity/Total Liabilities, and X5 = Net Sales/Total Assets. Revised coefficients are used for private and non-manufacturing companies.

What is a good Altman Z-Score?

For public manufacturing companies, a Z-Score above 2.99 is considered the Safe Zone (low bankruptcy risk), scores between 1.81 and 2.99 fall in the Grey Zone (uncertain), and scores below 1.81 indicate the Distress Zone (high bankruptcy risk). Thresholds differ slightly for private and non-manufacturing models.

Can the Altman Z-Score be negative?

Yes. If a company has very negative retained earnings or EBIT (i.e., large accumulated losses or operating losses), the Z-Score can be negative. A negative score strongly indicates financial distress and a high probability of bankruptcy.

What is EBIT and why is it used in the Z-Score?

EBIT stands for Earnings Before Interest and Taxes — it measures a company's core operating profitability before financing costs and taxes. It is used in the Z-Score because it reflects how efficiently a company generates profit from its assets, independent of its capital structure or tax jurisdiction.

Which Altman Z-Score model should I use for private companies?

For private (non-publicly traded) companies, Altman developed a revised model (Z') that replaces market value of equity with book value of equity and adjusts the coefficients. The thresholds also shift: above 2.9 is Safe Zone, below 1.23 is Distress Zone. This calculator automatically applies the correct model based on your company type selection.

What are the limitations of the Altman Z-Score?

The Z-Score was originally calibrated on manufacturing companies in the 1960s, so it may be less accurate for financial institutions, startups, or heavily asset-light businesses. It is backward-looking (based on historical financial statements), does not account for qualitative factors like management quality or industry trends, and should be used alongside other credit analysis tools.

How is the Altman Z-Score used in credit analysis?

Lenders, bond investors, and distressed debt analysts use the Z-Score as a quick screening tool to flag companies at risk of default before conducting deeper due diligence. A deteriorating Z-Score over consecutive periods can be an early warning signal for financial trouble, making it useful for tracking a company's financial health over time.

More Finance Tools