Calculate a company's Altman Z-score
Seven figures from the balance sheet and the income statement are enough. You get the Z-score, the zone and the contribution of each of the five ratios, with the same formula as on the company page.
Your figures
Pre-filled with an example. Replace the figures with those of your company or your customer.
Result
Z-score
Scale from 0 to 5; scores outside it are shown at the edge.
The five ratios
This tool gives an indication based on the figures you enter. It does not replace advice from your accountant.
How it works
The Z-score for private companies (Altman, 1983) adds up five weighted ratios: 0.717 times working capital/assets, 0.847 times equity/assets, 3.107 times EBIT/assets, 0.420 times equity/debt and 0.998 times turnover/assets.
Working capital is current assets minus debts due within one year. Jaarrekening.be uses equity as a proxy for retained earnings, because Belgian annual accounts do not show that item separately.
Above 2.9 is the safe zone, below 1.23 the distress zone, in between the grey zone. One year says little: a falling Z-score over three years is the real signal.
The score was designed for manufacturing and trading companies. For holdings, property companies and service companies with few assets, the turnover/assets ratio distorts the result.
Frequently asked questions
What is a good Z-score?
Above 2.9 a company is in the safe zone. Between 1.23 and 2.9 it is undecided and you should look at the trend and the other signals. Below 1.23 the risk of bankruptcy within two years is real.
Where do I find these figures in the annual accounts?
Balance sheet total (code 20/58), current assets (29/58), debts due within one year (42/48), equity (10/15), operating profit (9901), total debt (17/49) and turnover (70). An abbreviated format has no turnover; use gross margin (9900).
Why does the Z-score differ from the health score?
The health score weighs solvency, liquidity and profitability over three years into a score out of 5. The Z-score is a statistical model on a single year that also includes turnover and EBIT. Both are on the company page; look at both.
Does the Z-score work for every sector?
Not equally well. The model was built on manufacturing companies. For holdings and management companies with little turnover and many financial assets, the score often comes out low without real danger. Always combine it with solvency and liquidity.
Rather not calculate?
Look up the company and we show the score, the credit limit and the sector benchmark from its latest annual accounts.
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