Calculate Altman Z-Score for bankruptcy risk assessment from working capital, retained earnings, EBIT, equity, and revenue ratios.
The Altman Z-Score is a bankruptcy screen built from five ratios: working capital, retained earnings, EBIT, and sales each divided by total assets, plus market value of equity divided by total liabilities, weighted 1.2, 1.4, 3.3, 0.6, and 1.0, then summed. Above 2.99 is the safe zone, below 1.81 the distress zone, and in between the grey zone. What surprises most users: the model was calibrated on US public manufacturing firms in 1968, so private companies, banks, and startups sit outside its scope, and the zone cutoffs come from that one sample, not from any measured probability of failure.
A concrete input and expected output from the current implementation.
Input
working capital 200000, total assets 1000000, retained earnings 250000, EBIT 120000, market value of equity 900000, total liabilities 500000, sales 1500000
Expected output
Z = 3.57 - safe zone (above 2.99)
The ratios are 0.20, 0.25, 0.12, 1.80, and 1.50, so Z = 1.2(0.20) + 1.4(0.25) + 3.3(0.12) + 0.6(1.80) + 1.0(1.50) = 0.24 + 0.35 + 0.396 + 1.08 + 1.50 = 3.57, which clears the 2.99 safe-zone threshold.
Z = 1.2(X1) + 1.4(X2) + 3.3(X3) + 0.6(X4) + 1.0(X5), where X1 is working capital over total assets, X2 retained earnings over total assets, X3 EBIT over total assets, X4 market value of equity over total liabilities, and X5 sales over total assets. EBIT carries the heaviest weight at 3.3, so profitability dominates the score, while the working-capital and retained-earnings terms contribute least.
The total is compared with two cutoffs from Altman's 1968 sample: above 2.99 is the safe zone, between 1.81 and 2.99 the grey zone, below 1.81 the distress zone. Because every ratio divides by total assets or liabilities, the score is scale-free, so firms of very different sizes are compared on the same terms. All five inputs must come from the same reporting period.
No. The zones are cutoffs from Altman's 1968 sample of US manufacturers, not failure odds. The score is a relative-risk screen: lower means riskier within the model's scope, but companies can trade in the distress zone for years, and for firms outside that scope, such as banks or private companies, even the direction of the signal can mislead.
Not in the classic formula. X4 calls for market value of equity, and substituting book value changes both the number and what it means. For a private firm, use the revised Z'-Score, which is built on book equity with its own weights and thresholds. If this calculator does not offer that variant, treat the output as approximate.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
Calculate gross, operating, and net profit margins from cost and revenue with breakeven analysis.
Convert between annual salary and hourly rate with adjustments for work hours, overtime, and benefits.
Calculate sales tax amounts, tax-inclusive and tax-exclusive prices for any tax rate or jurisdiction.
Calculate return on investment from initial cost and final value with annualized ROI and comparison tables.
Convert between markup and margin percentages, calculate selling price, and compare pricing strategies.
Convert numeric amounts to written words for invoices, checks, and legal documents in multiple currencies.