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 score is a discriminate model that can predict the probability of a company to face bankruptcy or succeed in the next two years. Created in the 1960s by the Dr. Edward I. Altman, while testing on companies with more than 1 million dollar of assets, this score did improve with time and gives today some pretty accurate predictions.
There is a scorecard for four types of companies: private enterprises, public manufacturing and non-manufacturing companies, as well as companies from emerging markets. It excludes the financial companies. The calculation takes the sum of a few financial ratios weighted by a coefficient. The final score puts the company in one of the 3 zones: bankrupt, grey or safe.
It is a recognized tool and is widely used by finance professional when it comes to evaluate the creditworthiness of a company. Banks and financial institutions use it when issuing loans, insurance companies when reassuring debt, investors to evaluate the risk of losing their investment, and many others. With this simulator, you could 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.