Screen an industrial company with the Altman model that matches its ownership and business type. The calculator derives working capital, applies the published coefficients, places the score against that model’s cutoffs, and exposes every contribution to the total. It does not convert the score into a bankruptcy probability or investment recommendation.
Financial-distress classificationChoose the company model before reading the score.
Illustrative example values loaded
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How to use this calculator
Enter the company type first, then enter current assets, current liabilities, total assets, retained earnings, EBIT, total liabilities, the model-specific equity value, and net sales when the selected model uses it.
Review that every amount comes from a consistent reporting period, currency scale, and accounting basis, and confirm that market value is used only for the original public-manufacturing model.
Read the Altman score, screening zone, exact cutoff range, and X1–X5 contribution ledger before comparing the result with other credit, liquidity, and qualitative evidence.
Formula
Public manufacturing Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 1.0X5; private manufacturing Z' = 0.717X1 + 0.847X2 + 3.107X3 + 0.420X4 + 0.998X5; non-manufacturing Z" = 6.56X1 + 3.26X2 + 6.72X3 + 1.05X4. X1 is working capital / total assets, X2 retained earnings / total assets, X3 EBIT / total assets, X4 equity value / total liabilities, and X5 net sales / total assets.
Worked example
For the public-manufacturing model, current assets 150, current liabilities 100, total assets 500, retained earnings 100, EBIT 50, market equity 300, total liabilities 200, and sales 700 produce X1–X5 contributions of 0.12, 0.28, 0.33, 0.90, and 1.40. Their sum is Z = 3.03, above the model’s 2.99 upper cutoff.
Reference guide
Formula details and result guidance
Follow the variables, derivation, precision rule, and worked cases below to reproduce the calculation independently.
Variables
Formula variables, units, and roles
Symbol
Meaning
Unit
Role
X1
Working capital / total assets
ratio
Intermediate
X2
Retained earnings / total assets
ratio
Intermediate
X3
EBIT / total assets
ratio
Intermediate
X4
Market or book equity / total liabilities
ratio
Intermediate
X5
Net sales / total assets
ratio
Intermediate
Z
Selected Altman model score
index
Output
Derivation
Choose the company model before calculating. The original Z equation is for publicly traded manufacturers, Z' is re-estimated for private manufacturers, and Z" removes sales for non-manufacturing industrial firms.
Compute working capital as current assets minus current liabilities, then divide it and the other accounting numerators by the denominator specified for X1 through X5.
Use market value of common and preferred equity for X4 in the original public-company model. Use book value of equity for X4 in the private-manufacturing and non-manufacturing models.
Multiply each ratio by the selected model’s coefficient without rounding the intermediate ratio or contribution, then sum the contributions to obtain Z, Z', or base Z".
Compare the unrounded total with that model’s own lower and upper cutoff. A score exactly equal to either boundary remains in the grey zone.
Rounding and precision
Enter every amount in the same currency and scale; the ratios make dollars, thousands, or millions equivalent when the scale is consistent. The calculation retains decimal precision through the weighted sum and rounds only the display. This page uses the later common decimal-ratio form of the original model with a 1.0 coefficient for X5, not percent-point inputs paired with the older small coefficients.
Worked and boundary examples
Worked example
Public manufacturer with a grey-zone result
Input
CA 500; CL 300; TA 1,000; RE 100; EBIT 80; market equity 900; liabilities 600; sales 1,200
Output
Z = 2.744000 · Grey zone
The contributions are 0.24 + 0.14 + 0.264 + 0.90 + 1.20. The score is between the original model’s 1.81 and 2.99 boundaries.
Worked example
Same statements under the private-company model
Input
CA 500; CL 300; TA 1,000; RE 100; EBIT 80; book equity 400; liabilities 600; sales 1,200
Output
Z' = 1.954260 · Grey zone
Changing the equity basis is not enough by itself: the private-company model also uses re-estimated coefficients and its own 1.23 and 2.90 boundaries.
Boundary case
Exact lower boundary
Input
Public model: CA 50; CL 50; TA 100; RE 0; EBIT 0; market equity 0; liabilities 100; sales 181
Output
Z = 1.810000 · Grey zone
Only X5 contributes in this constructed boundary case. Because the historical distress condition is strictly below 1.81, equality is classified as grey.
Common mistakes
Replacing market equity with book equity inside the original equation while leaving every original coefficient and cutoff unchanged.
Entering X1 through X4 as percentage points such as 20 while also using the modern coefficients intended for decimal ratios such as 0.20.
Treating total liabilities as only interest-bearing debt, mixing reporting dates or currency scales, or adding 3.25 to Z" and still applying the base Z" cutoffs.
How to interpret the result
A lower score is a historical financial-distress signal under the selected empirical model. Distress, grey, and lower-distress zones describe sample-based classification ranges, not a probability, guarantee, modern bond rating, or decision to lend, invest, trade, or file for bankruptcy. Review trends, cash flow, debt maturity, industry conditions, disclosures, and qualitative credit evidence alongside the score.
Scope
Appropriate for
Reproducing a selected Altman model from one consistent industrial-company reporting period and auditing every ratio contribution.
Comparing the same company across reporting periods after keeping the model, accounting basis, and input definitions consistent.
Do not use for
Producing a bankruptcy probability, credit rating, audit conclusion, valuation, lending approval, or buy-or-sell recommendation.
Screening banks, insurers, brokers, or another company whose industry structure and accounting fall outside the selected industrial model.
Use this as an empirical financial-distress screen, not as a bankruptcy probability, credit rating, solvency opinion, valuation, or standalone investment decision.
Choose the model before entering equity: the original public-manufacturing model uses market value, while the private-manufacturing and non-manufacturing variants use book value. The Z" result shown here excludes the separate +3.25 bond-rating calibration.
The historical models were estimated from specific company samples and reporting conventions. Banks, insurers, very young companies, reorganized firms, and industry-specific accounting can require a different model and professional review.
Trust comes from reproducible evidence, not model confidence. You can inspect the formula, assumptions, worked example, and cited sources on this page.
Versioned calculationFormula logic is kept separate from the interface and covered by automated registry and behavior checks.
Cited evidenceSources linked for independent checking: 3.
Transparent AI useAI may assist drafting or adversarial review. Agreement between models is not proof, and no human expert review is claimed unless a named reviewer is shown.
Risk-sensitive calculator. No human domain-expert review is recorded for this page. Treat the result as an educational estimate, not as medical, financial, tax, legal, electrical, engineering, or safety approval.
Frequently asked questions
Is the Altman Z-Score Calculator a bankruptcy probability?
No. It applies a linear discriminant scoring model and compares the result with historical classification cutoffs. The score is not a calibrated probability, guarantee, credit rating, or substitute for current company and industry analysis.
Which model should I choose in the Altman Z-Score Calculator?
Use the original Z model for a publicly traded manufacturing firm, Z' for a private manufacturing firm, and the four-ratio Z" model for a non-manufacturing industrial firm. Do not silently replace market equity with book equity in the original equation.
Can banks or insurers use the Altman Z-Score Calculator?
Use caution. Financial institutions have balance-sheet structures and regulatory capital measures that differ from the industrial firms used to develop these models. A sector-specific framework and qualified credit analysis are more appropriate.
Last updated 2026-08-25 · altman-z-z-prime-z-double-prime-v1 · content-2026-08-25 · Published by YunFanLabs