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 model offers a discriminant analysis that can help predict whether a firm/company could go bankrupt within 2 years. Created in the 1960s by Dr. Edward I. Altman, and tested on companies having more than $1M dollars in assets, the model has improved with time and can give pretty accurate bankruptcy predictions.
The model comprises four types of companies: private enterprises, public manufacturing and non-manufacturing companies, as well as companies from emerging markets, but excludes financial companies. The calculation takes the sum of a few financial/business ratios, weighted by coefficients, and the final score puts the company in one of 3 zones: bankrupt, grey or safe.
The Altman Z-score is a recognized tool widely used by finance professionals when evaluating the creditworthiness of a company. Banks and financial institutions use it when issuing loans, insurance companies when reassuring debt, investors when evaluating the risk of their investments, and many others.
With the following simulator you can 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.
