Assess the probability that a company will go bankrupt within the next two years using the Altman Z-Score formula.
Financial Inputs
Z-Score Result
Altman Z-Score3.84Safe Zone
Z-Score vs. Safety Intervals
About this calculator
Overview
Assess the probability that a company will go bankrupt within the next two years using the Altman Z-Score formula.
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Pro Tips
What is the Altman Z-Score?: Developed by Professor Edward Altman in 1968, the Z-Score uses five financial ratios to predict the probability of corporate bankruptcy. It is over 80% accurate for predicting failures up to two years out.
What do the scores mean?: A score above 3.0 indicates a 'Safe Zone'. A score between 1.81 and 2.99 is a 'Grey Zone' (caution). A score below 1.81 is a 'Distress Zone' (high risk of bankruptcy).
Is the Z-Score applicable to all companies?: The original formula was designed for public manufacturing firms. Modified versions exist for private firms and non-manufacturing companies.
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Fun Facts
"The Z-Score was one of the first multi-variate statistical techniques used in finance."
"During the 2008 financial crisis, many large banks had extremely low Z-Scores long before they collapsed."
"The formula weights EBIT (Operational Profit) more than three times as heavily as Working Capital."
