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Altman Z-Score Calculator
Result
Chart
Show formula & working
Original: Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5
Z′ = 0.717X1 + 0.847X2 + 3.107X3 + 0.420X4 + 0.998X5 · Z″ = 6.56X1 + 3.26X2 + 6.72X3 + 1.05X4
X1 = working capital ÷ TA, X2 = retained earnings ÷ TA, X3 = EBIT ÷ TA, X4 = equity (market value in Z, book value in Z′ and Z″) ÷ total liabilities, X5 = sales ÷ TA. Coefficients: Altman (2002). The 1.81 grey-zone floor and Z″ 1.10 distress line are from that paper; the other cut-offs are the commonly cited ones and are editable.Details
Altman Z-score models: rates and rules as of May-2002 · Source: E. I. Altman, 'Revisiting Credit Scoring Models in a Basel 2 Environment', NYU Stern, May 2002 (coefficients for Z, Z′ and Z″; 1.81 grey-zone floor; Z″ distress below 1.10; +3.25 EM constant). Every figure based on it stays editable.
How this works
The Z-score combines five balance-sheet and P&L ratios into one number that, in Altman's studies, separated companies that later failed from those that did not.
Use the version that fits: the original for listed manufacturers, Z′ for private firms (book equity), and Z″ for non-manufacturers, which drops the sales ratio.
Frequently asked questions
Is the Z-score reliable for Indian companies?
It was built on US data. It is a useful screen, but lenders rely on their own rating models.
Why is retained earnings important?
It captures the firm's age and cumulative profitability — young firms with losses score low.
Want your ratios read the way a lender reads them?
Classification, quasi-equity and one-off items all move the ratios. Talk to Rytvae before you approach lenders.