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Altman Z-Score Calculator

Estimate a company's Altman Z-Score, the classic 1968 bankruptcy-prediction formula combining five balance-sheet and income-statement ratios into one number.

Altman Z-Score
3.528
A — Working capital / total assets
0.1
B — Retained earnings / total assets
0.2
C — EBIT / total assets
0.16
D — Market value of equity / total liabilities
2
E — Sales / total assets
1.4

Where this falls

3.5 falls in the "Safe zone — historically associated with financial health" range.

How it works

Edward Altman's 1968 Z-Score combines five financial ratios into a single score meant to predict a publicly traded manufacturing company's bankruptcy risk: Z = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E, where A = working capital ÷ total assets (short-term liquidity), B = retained earnings ÷ total assets (accumulated profitability and company age), C = EBIT ÷ total assets (operating earning power), D = market value of equity ÷ total liabilities (how much market cushion sits above total debt), and E = sales ÷ total assets (asset turnover). Each coefficient came from Altman's original discriminant analysis on real bankrupt vs. non-bankrupt firms, not from this calculator — every input here is a figure you supply from a specific company's own financials.

Altman's own published thresholds split the result into three zones: below 1.81 is the 'distress' zone historically associated with bankruptcy within about two years, above 2.99 is the 'safe' zone, and the band in between is a 'grey' zone the score alone can't resolve.

FAQ

Does a low Z-Score mean a company will definitely go bankrupt?

No — it's a historical statistical association from Altman's original 1960s sample of manufacturers, not a guarantee for any specific company today. It's best used as one quick screening signal among others, not a standalone verdict, and the original coefficients are calibrated for publicly traded manufacturing firms specifically (private or non-manufacturing companies are better served by Altman's later Z'-Score and Z''-Score variants, which use different coefficients this calculator doesn't implement).

Why does the formula use the market value of equity instead of book value?

The original Z-Score uses market value of equity (share price × shares outstanding) because Altman found the market's forward-looking assessment of a company's worth predicted distress better than its accounting book value — this is also why the model was originally built for public companies, where a market value is readily observable.

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