Investment AnalysisFree Tool

Altman Z-Score Calculator

Provided byOmni Calculatoromnicalculator.com

This Altman Z-score calculator is designed to help you assess a company's credit risk by calculating the Altman Z-Score.

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About this tool

What Altman Z-Score Calculator does

The Altman Z-Score Calculator on Omni Calculator is a specialized tool for assessing a company's credit risk and probability of default. Users input key financial data such as working capital, retained earnings, EBIT, total assets, and market value of equity to receive a calculated Z-Score. The result provides an immediate indication of financial health, classifying the company as safe, grey, or distressed based on established thresholds. The output is designed for quick interpretation, allowing users to gauge credit risk without manually applying the complex discriminant analysis formula. The calculator also serves an educational purpose, offering definitions and examples to help users understand the components of the score before relying on the result.

Step by step

How to use the Omni Calculator Altman Z-Score Calculator

  1. 1

    Enter the company's Sales figure into the designated field

  2. 2

    Input Earnings before interest and tax (EBIT) to assess operational profitability

  3. 3

    Provide Total assets and Total liabilities to calculate the asset and debt structure

  4. 4

    Input Net working capital and Retained earnings to evaluate liquidity and historical profitability

  5. 5

    View the calculated Altman Z-Score and its interpretation based on the computed value

Is it right for you

Best for

Investors and financial analysts seeking a quick, quantitative method to screen companies for credit risk and default probability using a widely recognized bankruptcy prediction model.

Limitations

  • Relies on the accuracy of user-input financial data; errors in entry will skew the Z-Score
  • Designed for manufacturing and manufacturing-type firms; may be less accurate for service or financial companies
  • Provides a probability assessment based on historical models, not a guarantee of future financial stability
Questions

Altman Z-Score Calculator FAQ

What is a good Altman Z-Score value?
An Altman Z-Score above 3.0 generally indicates a company is safe from bankruptcy, while a score between 1.8 and 3.0 falls into a 'grey area' requiring further investigation, and a score below 1.8 suggests a high risk of financial distress.
Can this calculator be used for any type of business?
The Altman Z-Score model was originally developed for manufacturing firms, so it is most accurate for companies with similar operational structures; service or financial firms may find the results less reliable.
What financial data is required to use the Omni Calculator version?
You need to provide the company's Sales, EBIT, Total assets, Total liabilities, Net working capital, and Retained earnings to generate an accurate Z-Score.
How is the Altman Z-Score calculated?
The score is calculated using a discriminant analysis formula that weights specific financial ratios, including working capital, retained earnings, EBIT, and the market value of equity relative to total assets, to produce a single predictive number.
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