# Altman Z Score Calculator

Assess financial health using the Altman Z Score with our calculator.

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The Altman Z-Score is a financial metric developed by Edward I. Altman in the 1960s. It’s used to assess the likelihood of a company facing financial distress or bankruptcy within two years. The Z-Score formula takes into account multiple financial ratios to provide an overall score that can help investors, creditors, and analysts evaluate a company’s financial health and credit risk.

## How to Use the Altman Z-Score Calculator

### Step 1: Gather Financial Data

Collect the required financial information from the company’s financial statements, including the most recent balance sheet and income statement. You’ll need the following data:

**Working Capital (WC):**The difference between a company’s current assets and current liabilities.**Retained Earnings (RE):**The accumulated net profits retained in the company, also known as shareholders’ equity.**Earnings Before Interest and Taxes (EBIT):**The company’s operating income before deducting interest and income taxes.**Market Value of Equity (MVE):**The market capitalization or the market value of the company’s equity, which is the number of outstanding shares multiplied by the share price.**Book Value of Total Liabilities (BVTL):**The total value of the company’s liabilities as reported on the balance sheet.

### Step 2: Enter the Data

Input the gathered financial data into the Altman Z-Score Calculator. Make sure you enter the values correctly.

### Step 3: Calculate

Click the “Calculate” button. The Altman Z-Score Calculator will process the data and provide you with the Altman Z-Score. The score will indicate the company’s financial health and credit risk based on the following criteria:

**Z-Score > 2.6:**The company is considered safe and is less likely to face financial distress.**1.1 < Z-Score < 2.6:**The company is in a gray area and may face financial difficulties in the future.**Z-Score < 1.1:**The company is at high risk of financial distress or bankruptcy.

The Altman Z-Score is a valuable tool for investors and creditors when evaluating a company’s financial stability and creditworthiness. It helps in making informed decisions about investments or extending credit to a company.