# Altman Z-Score Calculator

LAST UPDATE: September 24th, 2020

## Definition – What is an Altman Z-Score?

The Altman Z-Score gauges a manufacturing company’s probability of bankruptcy.

## Formula – How to calculate Altman Z-Score

A = Working Capital / Total Assets

B = Retained Earnings / Total Assets

C = EBIT / Total Assets

D = Market Value of Equity / Total Liabilities

E = Sales / Total Assets

Altman Z-Score = (1.2 x A) + (1.4 x B) + (3.3 x C) + (0.6 x D) + E

### Example

An organization has total assets of \$7,000, working capital of \$3,000, retained earnings of \$750, EBIT of \$3,000, market value of equity of \$1,500, total liabilities of \$2,000, and sales of \$12,000.

A = \$3,000 / \$7,000 = 0.4286

B = \$750 / \$7,000 = 0.1071

C = \$3,000 / \$7,000 = 0.4286

D = \$1,500 / \$2,000 = 0.75

E = \$12,000 / \$7,000 = 1.7143

Altman Z-Score = (1.2 x 0.4286) + (1.4 x 0.1071) + (3.3 x 0.4286) + (0.6 x 0.75) +1.7143

Altman Z-Score = 0.51432 + 0.14994 + 1.41438 + 0.45 + 1.7143 = 4.243