Altman Z-Score Calculator
Bankruptcy early-warning from 5 balance-sheet ratios (Altman 1968).
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Working capital
Also called: Net working capital
Where to find it: From the balance sheet: current assets − current liabilities.
How to derive: Current assets − current liabilities.
Retained earnings
Also called: Accumulated earnings
Where to find it: Balance sheet, within the equity section.
How to derive: Sum of all past profits not paid out as dividends.
EBIT (operating profit)
Also called: Operating income, earnings before interest & taxes
Where to find it: Income statement (middle), before interest and taxes.
How to derive: Revenue − operating costs (or: net income + interest + taxes).
Market capitalization
Also called: Market cap, MVE (market value of equity)
Where to find it: Shown prominently on any stock overview page.
How to derive: Share price × shares outstanding.
Total liabilities
Also called: Total debt + payables
Where to find it: Balance sheet, sum of all liabilities (excluding equity).
How to derive: Total assets − shareholder equity.
Revenue
Also called: Sales, turnover, top line
Where to find it: Income statement, very first line.
How to derive: Units sold × price; stated directly in the income statement.
Total assets
Also called: Balance sheet total
Where to find it: Balance sheet, sum of the asset side (= sum of liabilities + equity).
How to derive: Current assets + non-current assets (everything the company owns).
Result, live
Calibrated for listed manufacturers. Banks/insurers/REITs: not applicable (structurally different balance sheets) - our calculator auto-hides Z there.
The Altman Z-Score is a bankruptcy early-warning system: it condenses five balance-sheet ratios into a single number that gauges failure risk. Edward Altman built it in 1968, still a standard for spotting financial distress early.
How the formula works
Five weighted ratios covering liquidity, retained earnings, earning power, market value and turnover combine into the Z-Score.
Example: Working capital 1,500, retained earnings 4,000, EBIT 1,100, market cap 12,000, liabilities 5,000, sales 8,000, total assets 11,000 ($m) gives Z ≈ 3.2: safe zone.
How to read the result
- Above 2.99: safe zone, low bankruptcy risk.
- 1.81 to 2.99: grey zone, look closer.
- Below 1.81: distress zone, elevated failure risk.
What to watch out for
- Calibrated for listed manufacturers. For banks, insurers and REITs it is unsuitable, our calculator auto-hides it there.
- Market value feeds in, so the score swings with the share price.
- It replaces no valuation, it only measures default risk.