Altman Z-Score Calculator

About this calculator

This calculator computes the Altman Z-Score, developed by Edward Altman in 1968, as the weighted sum 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 = sales ÷ total assets. The five ratios each capture a different dimension of financial health — liquidity, cumulative profitability, current earning power, market confidence, and asset efficiency.

The score sorts companies into three zones: above 2.99 is the "safe" zone with low bankruptcy risk, 1.81–2.99 is the "grey" zone of uncertainty, and below 1.81 is the "distress" zone with elevated bankruptcy risk within roughly two years. Credit analysts, auditors evaluating going-concern risk, and distressed-debt investors use it as a fast, back-of-envelope screen — though it was built and validated on public manufacturing companies, so results on other industries are used with more caution.