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Altman Ratio Calculator

Key in the EBIT and Interest Expense Values from your Income Statement to the respective fields given below and then click Calculate to get the desired result.












Altman Ratio Calculator - Glossary:

Altman-Z Score Ratio : The Altman Z-score is a financial metric used to predict the likelihood that a business may face bankrupt within the next two years. Developed by Edward Altman in 1968, the formula combines five financial ratios derived from a company’s balance sheet and income statement to provide a single numerical value reflecting its financial health.

How to use this equation?

Altman Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
Where:
A = working capital / total assets
B = retained earnings / total assets
C = earnings before interest and tax / total assets
D = market value of equity / total liabilities
E = sales / total assets

Example:
If company has following values (In Thousands)
Working capital: $16,400
Retained earnings: $8,148
EBIT: $7500
Total assets: $26,404
Market value of equity: $17,797
Total liabilities: $10,004
Sales: $39,895
Based on the above financial data, a company Altman-Z score of 4.86, it is financially strong and the likelyhood of bankruptcyis low.