Calculate Altman Z-Score for bankruptcy risk assessment with zone classification and historical trend chart.
This calculator plugs five balance-sheet and income-statement ratios into Edward Altman's 1968 discriminant formula, weights each one, sums them into a single Z-Score, and reports which of three risk zones the result falls into, charting the trend if you enter more than one period of data. The input people most often get wrong is X4: the original formula calls for the market value of equity divided by total liabilities, not book value, which matters enormously for private or thinly-traded companies where no market price exists.
A concrete input and expected output from the current implementation.
Input
Total assets $1,000,000; working capital $200,000; retained earnings $300,000; EBIT $150,000; market value of equity $500,000; total liabilities $400,000; sales $900,000
Expected output
Z-Score = 2.81, Grey Zone
X1=0.20, X2=0.30, X3=0.15, X4=1.25, X5=0.90; Z = 1.2(0.20)+1.4(0.30)+3.3(0.15)+0.6(1.25)+1.0(0.90) = 0.24+0.42+0.495+0.75+0.90 = 2.805, which lands between the 1.81 and 2.99 thresholds that bound the grey zone rather than clearly safe or distressed.
The tool computes 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), then combines them as Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5, Altman's original coefficients from discriminant analysis of manufacturing firms.
The resulting Z is bucketed into Safe (above 2.99), Grey (1.81 to 2.99), or Distress (below 1.81) and labeled accordingly. If you supply figures for multiple fiscal years, the tool plots the Z-Score over time so a declining trajectory toward the distress boundary is visible at a glance rather than buried in a single number.
You can, but only by substituting book value of equity for market value in X4, which is what Altman's separate private-firm model (Z') does with different coefficients and different zone cutoffs. Plugging book value into the original public-company formula distorts the score, so don't compare that result against the 1.81/2.99 thresholds.
Operating income before interest and taxes, taken from the income statement, excluding nonoperating gains or losses. Different data providers classify items differently, so if your EBIT figure includes one-time items the score will shift accordingly - check the line item before trusting a borderline result.
The example and behavioral notes were checked against the browser implementation. Standards and primary references below define the relevant format, formula, or platform behavior.
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