Altman Z-Score Calculator

How to use the Altman Z-Score calculator

What this calculator does. This tool applies the original five-factor Altman Z-Score model to a consistent set of company financial figures. It combines liquidity, accumulated profitability, operating profitability, market leverage, and asset turnover into one dimensionless score. The model is a screening measure for financial distress, not a guarantee that a company will or will not default. The original research was built around publicly traded manufacturing firms, so this calculator deliberately does not substitute later private-company or non-manufacturing variants. The bibliographic record for Edward Altman's 1968 Journal of Finance paper on bankruptcy prediction provides the historical source for the model.

When to use it. Use the score when you want a quick, repeatable credit-risk screen for a public manufacturer; when you are comparing the same company across reporting periods; when you are checking which accounting or market component is pulling the score up or down; or when you want to reproduce a Z-score from values reported in a company filing. It should sit alongside, not replace, cash-flow analysis, debt maturity review, industry context, management discussion, and other credit metrics.

How to calculate. The calculator opens with a complete demonstration set and an immediately usable Excel download. To replace the example:

1. Enter all seven required monetary values using the same currency and reporting scale. For example, if one line is in USD millions, every line must be in USD millions. Commas and an optional leading dollar sign are accepted; scientific notation and ambiguous decimal-comma formats are rejected.
2. Read the live Altman Z-Score and zone, then inspect the five ratio cards. The contribution chart shows the weighted effect of those same ratios, and the component table exposes the ratio, coefficient, and contribution used in the sum.
3. Select Download Excel to build a fresh workbook from the current validated controls. The workbook contains the current inputs, score, interpretation, and component detail.
4. Select Reset to clear the demonstration and all calculated state. Reset does not restore the sample. Download Excel becomes unavailable while the cleared state is incomplete, then automatically becomes available again after you enter a complete valid set.

Input guide. Sales is required, uses USD in this interface, must be zero or positive, and represents revenue for the period; the sample is $10,000,000. Higher sales increase the sales-to-assets term if assets are unchanged. Do not mix annual sales with balance-sheet values from an unrelated period. Earnings before interest and tax (EBIT) is required and may be negative; the sample is $4,000,000. Higher EBIT raises the operating-profitability contribution, while a loss can make it negative. Avoid substituting net income when EBIT is the intended line. Total assets is required and must be greater than zero; the sample is $50,000,000. It is the denominator for four of the five ratios, so changing assets can move several components at once. Total liabilities is required and must be greater than zero; the sample is $20,000,000. It is the denominator of the market-value-of-equity term, and zero is invalid because division would be undefined.

Net working capital is required and may be negative; the sample is $400,000. A common accounting definition is current assets minus current liabilities. A higher value increases the liquidity contribution. The SEC's guide to financial statements and working capital explains where assets, liabilities, sales, and related figures appear and notes that working capital is current assets minus current liabilities. When collecting the figures from a U.S. public company filing, Investor.gov's guide to reading a Form 10-K identifies the audited financial statements and related sections used for company analysis. Market value of equity is required, must be nonnegative, and is $20,000,000 in the sample; it is commonly share price times shares outstanding. Increasing it raises the leverage contribution when total liabilities are unchanged. Retained earnings is required and may be negative; the sample is $500,000. It captures accumulated profits retained in the business, so older or consistently profitable firms may show a stronger value, while accumulated losses can lower the score.

Output guide. Altman Z-Score is the dimensionless weighted sum of the five displayed ratios. In this implementation, values below 1.81 are labeled Distress zone, values from 1.81 through 3.00 are labeled Grey zone, and values above 3.00 are labeled Safe zone. These are screening bands rather than individualized recommendations. The five ratio cards – NWC / total assets, Retained earnings / total assets, EBIT / total assets, Market value equity / liabilities, and Sales / total assets – show the raw inputs to the weighted formula. A negative ratio is mathematically valid for NWC, retained earnings, or EBIT and can reduce the score. The Component detail table repeats each component, its formula label, current ratio, model weight, and weighted contribution. The Weighted score contribution chart visualizes those same five contributions on one zero-based scale; it does not create any extra assumptions or forecast values.

Worked example. With Sales of $10,000,000, EBIT of $4,000,000, Total assets of $50,000,000, Total liabilities of $20,000,000, Net working capital of $400,000, Market value of equity of $20,000,000, and Retained earnings of $500,000, the ratios are 0.0080, 0.0100, 0.0800, 1.0000, and 0.2000. Their weighted contributions are 1.2 × 0.0080 = 0.0096, 1.4 × 0.0100 = 0.0140, 3.3 × 0.0800 = 0.2640, 0.6 × 1.0000 = 0.6000, and 1.0 × 0.2000 = 0.2000. Adding them produces 1.0876, which this calculator labels the distress zone.

Learn more. For the origin and scope of the method, consult the 1968 Altman paper record. For the underlying accounting statements and definitions used to source the inputs, the SEC financial statement guide is a practical starting point.