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Original Altman Ratio Score

Calculate the five-factor public-manufacturing-company score from consistent financial statements.

  • Formula & worked example
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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

The displayed balances produce a score of 1.71 in the historical distress screening zone; this is not a default probability.

Z = 1.2 WC/A + 1.4 retained earnings/A + 3.3 EBIT/A + 0.6 market equity/liabilities + sales/A.

Worked example

Enter these known values and leave the other values blank.

Accounts receivable
100 USD
Inventory
100 USD
Accounts payable
100 USD
Number of shares outstanding
10
Share price
20 USD
Net income
100 USD
Dividend per share
0 USD
Sales
1000 USD
Earnings before interest and tax (EBIT)
100 USD
Total assets
1000 USD
Total liabilities
1000 USD
Net working capital
100 USD
Market value equity
200 USD
Retained earnings
100 USD
Net working capital
100 USD
Market value of equity
200 USD
Retained earnings
100 USD
Altman Z-Score
1.71

Assumptions and limitations

  • Use the original public manufacturing firm model. The working-capital subtotal here includes only entered receivables and inventory less payables; enter the complete net working capital directly when other current items exist.
  • Retained earnings is a cumulative balance-sheet balance. The auxiliary net-income-minus-dividends calculation represents one period only; enter cumulative retained earnings directly when using the score.
  • Threshold labels are historical screening categories, not probabilities or a diagnosis of insolvency.
  • Use one currency throughout. Retained currency selector factors are a historical snapshot, not live exchange rates.
  • Clear an editable unknown before solving an inverse. Selection controls and forced outputs cannot be inferred.

Common questions

What does this model assume?

Use the original public manufacturing firm model. The working-capital subtotal here includes only entered receivables and inventory less payables; enter the complete net working capital directly when other current items exist.

Can I use the currency menu as a current quote?

No. Keep amounts in one currency; conversion factors are a captured historical snapshot.

References

Required model inputs: Total assets must be positive. Total liabilities must be positive.

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