How to Use Altman Z-Score Calculator
The Altman Z-Score Calculator scores a firm’s bankruptcy risk by combining five balance-sheet and market ratios.
- Enter Working Capital, Retained Earnings, EBIT, Market Equity, and Sales — these are the five numerators.
- Enter Total Assets and Total Liabilities — the denominators that scale the ratios.
- Choose a currency — Only affects formatting of amounts in the summary panel.
- Read the Result — The Altman Z-Score Calculator displays the Z-Score, the five component ratios, and the zone classification (safe / grey / distress).
Formula & Theory — Altman Z-Score Calculator
The original Altman Z-Score formula for public manufacturing firms:
Z = 1.2·A + 1.4·B + 3.3·C + 0.6·D + 1.0·E
A = Working Capital / Total Assets
B = Retained Earnings / Total Assets
C = EBIT / Total Assets
D = Market Value Equity / Total Liabilities
E = Sales / Total Assets| Ratio | Meaning |
|---|---|
| A | Short-term liquidity buffer relative to assets |
| B | Cumulative profitability and reinvestment |
| C | Operating profitability per dollar of assets |
| D | Market cushion absorbing potential losses |
| E | Asset turnover / sales productivity |
Classification cutoffs:
- Z > 2.99 — Safe zone, financial health appears stable.
- 1.81 ≤ Z ≤ 2.99 — Grey zone, deserves closer scrutiny.
- Z < 1.81 — Distress zone, elevated risk of bankruptcy within two years.
This tool uses the manufacturing-firm cutoffs. For private firms, replace ratio D’s numerator with book value of equity and use the Z’ cutoff set.
Use Cases for Altman Z-Score Calculator
- Credit screening — Banks and trade-credit teams flag counterparties that fall into the grey or distress zones.
- Supplier risk management — Procurement teams monitor suppliers’ Z-Score quarterly to anticipate disruption risk.
- Equity research — Investors blend Z-Score with profitability and cash-flow metrics to filter distressed names.
- Education — Finance students learn how multivariate scoring models work using a concrete, well-documented example.
- Restructuring practice — Turnaround advisors use the Z-Score trajectory to communicate financial distress to stakeholders.
The Altman Z-Score Calculator turns five accounting ratios into a single, easy-to-communicate risk indicator.