Altman Z-Score Screener

By Christian Richter | Last updated 2026-09-23

Edward Altman published the Z-Score in 1968 while at New York University. The idea: companies approaching bankruptcy show predictable deterioration in five financial ratios well before they default. Altman combined working capital adequacy, cumulative profitability, earnings power, market confidence, and asset efficiency into a single weighted score. Below 1.81 is the distress zone. Above 2.99 is safe. The model was originally calibrated on manufacturing firms, and its accuracy has decayed for non-manufacturing sectors since 1968. None of the current online Z-Score tools mention this. Altman published a revised model (Z''-Score) in 1993 that drops the revenue-to-assets ratio and re-weights for service and non-manufacturing companies. On Shibui, you can compute both variants across the full market in plain English. For a step-by-step walkthrough, see the Altman Z-Score screening guide.

What the screener checks

The five ratios

Each ratio captures a different dimension of financial health. Altman assigned weights based on which ratios best discriminated between bankrupt and surviving firms in his original 1968 sample of manufacturing companies.

The composite formula:
Z = 1.2×X1 + 1.4×X2 + 3.3×X3 + 0.6×X4 + 1.0×X5

Above 2.99: safe zone. Between 1.81 and 2.99: grey zone. Below 1.81: distress zone.

The Z''-Score variant (Altman, 1993) drops X5 (revenue/total assets) because asset turnover varies too much across industries. It re-weights the remaining four ratios for non-manufacturing and service firms:
Z'' = 6.56×X1 + 3.26×X2 + 6.72×X3 + 1.05×X4
Thresholds shift: above 2.6 is safe, below 1.1 is distress.

Caveats worth knowing. The original model was calibrated on manufacturing firms in the 1960s. Service companies, tech firms, and financial institutions have different capital structures that the model was not designed for. Banks hold large liabilities by design, which pushes X4 artificially low. Companies with negative retained earnings from accumulated historical losses (Verisign, Domino's, Starbucks) produce extreme negative scores even though they are profitable and cash-generative. A low Z-Score is a reason to investigate, not a prediction of imminent bankruptcy.

Example screens

The market-wide distress screen. The prompt spells out the formula so Claude computes it correctly from quarterly balance sheets and income statements. X4 uses daily market cap from the valuation table. Adding the Beneish M-Score lets you see which distressed companies also show manipulation signals. A company in distress with suspicious earnings quality is a stronger negative signal than either score alone.

Per-company solvency check. The prompt defines each ratio so Claude maps them to the right financial statement fields. You can see exactly which ratios are pulling the score down. Boeing (BA) will likely score in the distress zone because of negative retained earnings from years of accumulated losses, not because bankruptcy is imminent. Lumen (LUMN) scores low because of high debt relative to market cap. The ratio breakdown tells you why.

Trend-change detection. This finds companies whose solvency deteriorated over multiple years. A stock that was safely above 2.99 and crossed below 1.81 has undergone a fundamental shift in financial structure. The prompt includes the formula so Claude computes the score at each historical point. Cross-reference with insider selling patterns for convergent signals.

How it compares to other Z-Score tools

Most Altman Z-Score tools either calculate the score for one company at a time or lock the screener behind a paywall. No other free tool runs the computation across the full US market or lets you combine it with other forensic scores.

The Altman Z-Score pairs naturally with two other forensic scores. The Beneish M-Score checks whether earnings are being manipulated. The Piotroski F-Score checks whether the company is getting financially stronger. Together, the three scores answer: is the company solvent, are its earnings real, and is it improving? For earnings momentum signals, see the earnings surprise screener. For tracking what insiders are doing with their own money, see insider buying signals. See the AI stock screener overview for how Shibui compares on other screening approaches.

Want to run this screen daily on a schedule? See the automated stock screener workflow for scheduling commands and prompt reliability patterns.

Frequently asked questions

What is the Altman Z-Score?

The Altman Z-Score is a formula that estimates a company's probability of bankruptcy using five financial ratios: working capital to total assets, retained earnings to total assets, EBIT to total assets, market cap to total liabilities, and revenue to total assets. Edward Altman published it in 1968 at NYU. A score above 2.99 is considered safe; below 1.81 is the distress zone. Shibui computes all five ratios from quarterly financial statements for 10,000+ US stocks.

Is there a free Altman Z-Score screener?

Shibui Finance is a free market-wide Altman Z-Score screener. Connect it to Claude (the free plan works) and describe your screen in plain English. Most existing Z-Score tools are single-company calculators or require a paid subscription (Stockopedia charges for its Z-Score screener). No other free tool screens the entire US market by Z-Score and lets you combine it with other forensic scores like the Beneish M-Score or Piotroski F-Score.

What does an Altman Z-Score below 1.81 mean?

A score below 1.81 places a company in the distress zone, meaning its financial ratios match the profile of companies that have historically gone bankrupt. This is a statistical probability, not a guarantee of bankruptcy. Some companies with low Z-Scores are viable businesses with negative retained earnings from accumulated historical losses (like Verisign or Domino's) or high debt by design (airlines, REITs). Scores between 1.81 and 2.99 are the grey zone. Above 2.99 is considered safe.

How is the Altman Z-Score different from the Beneish M-Score?

The Altman Z-Score estimates bankruptcy risk (can the company pay its debts?). The Beneish M-Score detects earnings manipulation (are the financial statements reliable?). They measure different risks using different inputs. Altman uses current-period balance sheet and income data. Beneish compares year-over-year changes in eight ratios. Together they form a complete forensic screen: Altman checks solvency, Beneish checks earnings quality, and the Piotroski F-Score checks whether the company is improving.

Can you backtest the Altman Z-Score on Shibui?

Yes. Shibui has quarterly financial data going back 20 or more years for most companies. You can ask Claude to compute the Z-Score at any point in the past and check whether companies in the distress zone later declined, defaulted, or recovered. This is a historical backtest, not a forward-looking prediction. Survivorship bias applies since delisted and bankrupt companies are not in the dataset, which understates the distress zone's predictive power.

Does Finviz have an Altman Z-Score screener?

No. Finviz does not include the Altman Z-Score as a screening filter. Stockopedia has a Z-Score screener but requires a paid subscription. TradingView offers per-chart Z-Score indicator scripts but not a market-wide screener. Shibui computes all five ratios across the full US market and lets you combine them with any other filter in a single plain-English query.