Calculate a Company's Risk of Bankruptcy with the Altman Z-score
It is possible to rapidly evaluate a company's risk of bankruptcy with the Altman Z-score. Using basic financial information, this model offers a discriminant analysis that can help predict whether a firm/company could go bankrupt within 2 years. Created in the 1960s by Dr. Edward I. Altman, and tested on companies having more than $1M dollars in assets, the model has improved with time and can give pretty accurate bankruptcy predictions.
The model comprises four types of companies: private enterprises, public manufacturing and non-manufacturing companies, as well as companies from emerging markets, but excludes financial companies. The calculation takes the sum of a few financial/business ratios, weighted by coefficients, and the final score puts the company in one of 3 zones: bankrupt, grey or safe.
The Altman Z-score is a recognized tool widely used by finance professionals when evaluating the creditworthiness of a company. Banks and financial institutions use it when issuing loans, insurance companies when reassuring debt, investors when evaluating the risk of their investments, and many others.
With the following simulator you can predict, for the next two years, a company's risk of bankruptcy with enough accuracy. It is free, simple and widely accepted as a reliable indicator in the world of finance.
Please change the suggested values with your own amounts in the blue text boxes.
Our financial calculators start with default values to suggest what to enter typically in each modifiable field, displayed as blue text boxes, in order to simulate a common scenario. Please change those values with your own. To keep track of your changes, the blue box will turn gray after they are modified.
You will also notice that our calculators behave like financial applications and recalculate automatically all values with each change instead of having to click on some extra button or going to a new result page, this is intentional and helps understand the effect of one change with the overall result in a more dynamic and instantaneous manner.
However, charts in our older calculators are not updated automatically, so if there is an "Update" button next to the chart, make sure to click on it after you make a change before you analyze it.