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Altman Z-Score Calculator

Predict the insolvency and bankruptcy risk of a company using the Altman formula.

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Calculation Parameters

Specify your inputs below.

Calculated Result

Altman Z-Score 3.19
Risk Category Safe Zone
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Expert Tip

Z-score thresholds: Z > 2.99 is "Safe Zone", 1.81 ≤ Z ≤ 2.99 is "Grey Zone", and Z < 1.81 is "Distress Zone".

How this Calculator Works

This calculator computes the Altman Z-Score, a statistical model that predicts the probability of a company going bankrupt within two years. It uses five key financial ratios derived from balance sheets and income statements. Analysts and lenders use it to evaluate credit risk.

Formula & Methodology

Z-Score = 1.2 * X1 + 1.4 * X2 + 3.3 * X3 + 0.6 * X4 + 0.999 * X5 - X1 is Working Capital / Total Assets. - X2 is Retained Earnings / Total Assets. - X3 is EBIT / Total Assets. - X4 is Market Value of Equity / Total Liabilities. - X5 is Sales / Total Assets. - Z > 2.99 is 'Safe Zone'; 1.81 < Z < 2.99 is 'Grey Zone'; Z < 1.81 is 'Distress Zone'.

Step-by-Step Calculation Example

Here is a step-by-step example showing how the calculations are performed:

A company reports ratios: X1 = 0.15, X2 = 0.25, X3 = 0.10, X4 = 1.5, X5 = 1.2. 1. Multiply each ratio: - 1.2 * 0.15 = 0.18 - 1.4 * 0.25 = 0.35 - 3.3 * 0.10 = 0.33 - 0.6 * 1.5 = 0.90 - 0.999 * 1.2 = 1.1988 2. Sum the products: 0.18 + 0.35 + 0.33 + 0.90 + 1.1988 = 2.9588. Result: The Z-Score is 2.96, placing the company in the Grey Zone.

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Detailed Insights & Expert Guide

ℹ️ About this Calculation

This business planning and financial management calculator analyzes operational profitability, cash flow runways, unit economics, and corporate growth performance based on standard managerial accounting and SaaS financial models.

Variable Glossary

Input

Financial Metrics

Revenue, fixed/variable costs, ARPU, CAC, churn rate percentage, or working capital inventory balances.

Parameter

Performance Ratio

Customer Lifetime Value (LTV), Monthly Recurring Revenue (MRR), break-even volume, or payback period duration.

How to Calculate Step-by-Step

1

Step 1

Input your business financial statements, unit sales prices, or marketing expense figures.

2

Step 2

Select reporting timeframes (monthly, quarterly, annual) or operational benchmark factors.

3

Step 3

View calculated margin ratios, burn rate projections, payback milestones, or profitability indexes.

FAQ

What is a healthy LTV to CAC ratio for subscription businesses?
A target LTV:CAC ratio of 3:1 or higher is generally considered healthy for SaaS and subscription models, indicating sustainable marketing ROI without overspending on acquisition.
How is the Break-even point calculated?
Break-even Units = Fixed Costs / (Price per Unit - Variable Cost per Unit). It determines the sales volume required to cover total operational expenses without profit or loss.
Can online business calculators replace professional financial auditing?
No. These calculators provide strategic modeling and decision support. Formal financial reporting, tax planning, and GAAP/IFRS audits require a certified public accountant (CPA) or financial advisor.