Insolvency Calculator
This insolvency calculator tests a company, not a household budget: enter balance-sheet and income-statement figures and it measures leverage, liquidity and earnings cover in three modes, up to a full Altman Z-Score, then gives a plain verdict from Solvent to Insolvent. If your employer has failed and you are owed pay instead, that is a different problem with its own rules: use the insolvency pay calculator for employee claims.
Financial position
Quick Answer
For the pre-filled company ($400,000 of assets against $290,000 of liabilities), Basic mode returns a debt-to-asset ratio of 72.5%, an equity ratio of 27.5%, a current ratio of 0.90, working capital of -$10,000 and net worth of $110,000, with the verdict At Risk. Switch to Altman Z-Score mode and the same company scores 1.97, inside the grey zone, and the verdict hardens to High Risk once the weak solvency ratio of 9.7% is counted too.
Key takeaways
- This is a company test built from accounts, not a personal debt check: there are no monthly income or expense fields anywhere in it.
- The verdict is a points system, not a legal finding. Negative net worth or a debt-to-asset ratio above 100% forces Insolvent; everything else is graded risk.
- Mode matters. Comprehensive and Altman modes add extra tests, so the same balance sheet can read At Risk in Basic and High Risk in Altman mode.
- Blank current assets or current liabilities score as a current ratio of 0.00 and weak liquidity. Always enter the real short-term figures.
How to use the insolvency calculator
Start in Basic Solvency for the balance-sheet picture, then move up a mode only when you have the extra figures each mode needs. Results stay hidden until you click Analyze Solvency.
- Financial position (every mode): enter total assets, total liabilities, current assets and current liabilities from the latest balance sheet. Both totals must be above zero; anything else stops with the message “Please enter valid total assets and total liabilities.”
- Comprehensive Analysis: adds net income and depreciation, and with them the solvency ratio. Revenue and EBIT appear in this mode too, but be aware they change nothing here: they only feed the Altman calculation.
- Altman Z-Score: adds retained earnings and the market value of equity, and computes the full five-term Z-Score alongside everything in Comprehensive mode.
- Read the whole result, not just the verdict: the breakdown lists each ratio against healthy benchmarks, names the specific risk factors it found, and scales a risk bar at 15% per risk point.
Two of the inputs deserve a second look before you trust the output. Working capital is simply current assets minus current liabilities, and the days working capital calculator shows how long that cushion actually funds operations. The market value of equity is a market price, not an accounting figure; the company valuation calculator covers the main ways that number is estimated for a private business.
The three tests inside the tool
The tool layers three different questions: is the balance sheet underwater, can the company pay near-term bills, and does the Altman model put it near bankruptcy. Each mode adds one layer.
Equity ratio = (Total assets − Total liabilities) ÷ Total assets × 100
Current ratio = Current assets ÷ Current liabilities
Working capital = Current assets − Current liabilities
Net worth = Total assets − Total liabilities
Solvency ratio = (Net income + Depreciation) ÷ Total liabilities × 100
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 = EBIT ÷ Total assets, D = Market value of equity ÷ Total liabilities, E = Revenue ÷ Total assets
The first test is the balance-sheet test in plain form: under section 123 of the Insolvency Act 1986, a company is deemed unable to pay its debts when the value of its assets is less than its liabilities, counting contingent and prospective liabilities. That is exactly the line this tool draws at negative net worth. What the tool does not run is the other half of section 123, the cash-flow test (can the company pay debts as they fall due), because that needs payment dates and cash balances a ratio form cannot see. The SEC’s guide to financial statements is a good primer on where each input sits in published accounts if you are pulling figures from a filing.
The leverage pair (debt-to-asset and equity ratio) always sums to 100%, so read them as two views of one fact: who funds the assets, creditors or owners. A close cousin worth checking on a geared business is the capital gearing ratio calculator, which compares debt directly with equity funds rather than with total assets, and the debt to enterprise value ratio calculator for listed companies where market value is observable.
Worked example: one company, three verdicts
The pre-filled company is a small manufacturer with $400,000 of assets, $290,000 of liabilities and thin short-term cover. Here is every headline line the tool returns for it in each mode, all verified against the calculator itself.
| Output | Basic | Comprehensive | Altman |
|---|---|---|---|
| Debt-to-asset ratio | 72.5% | 72.5% | 72.5% |
| Equity ratio | 27.5% | 27.5% | 27.5% |
| Current ratio | 0.90 | 0.90 | 0.90 |
| Working capital / net worth | -$10,000 / $110,000 | -$10,000 / $110,000 | -$10,000 / $110,000 |
| Solvency ratio | not shown | 9.7% | 9.7% |
| Altman Z-Score | not shown | not shown | 1.97 |
| Verdict | At Risk | High Risk | High Risk |
The Z-Score of 1.97 is built term by term: A contributes -0.03 (negative working capital), B contributes 0.21, C contributes 0.18, D contributes 0.31, and E contributes 1.30. Sales strength is doing almost all of the holding up; the balance-sheet terms are weak.
For contrast, run the same tool on a steadier company ($500,000 assets, $300,000 liabilities, $180,000 current assets, $120,000 current liabilities, with the same upper-mode inputs as the worked example above: $18,000 net income, $10,000 depreciation, $520,000 revenue, $22,000 EBIT, $60,000 retained earnings and $150,000 market value of equity): debt-to-asset 60.0%, current ratio 1.50, solvency ratio 9.3% and a Z-Score of 1.80 read High Risk. Push liabilities past assets ($200,000 against $260,000) and the tool returns a debt-to-asset ratio of 130.0%, net worth of -$60,000 and the verdict Insolvent, whatever the other ratios say.
How the verdict is scored, in the open
The status is a simple points tally over the ratios, and it is this tool’s own scoring, not a published standard. Knowing the tally stops the verdict surprising you.
| Test | Points added | Reading |
|---|---|---|
| Debt-to-asset ratio | +1 above 30%, +2 above 50%, +3 above 70% | Under 40% is excellent |
| Current ratio | +1 below 1.5, +2 below 1.0 | Above 1.5 is good liquidity |
| Net worth | +2 if under 10% of assets, +4 and Insolvent if negative | Thin cushion under 10% |
| Solvency ratio (upper modes) | +1 below 20% | 20% or more covers debt service |
| Altman Z-Score (Altman mode) | +2 below 3.0, +4 below 1.8 | Under 1.81 is Altman’s distress zone |
Totals map to verdicts at 3 points (At Risk) and 6 points (High Risk), with negative net worth or a debt-to-asset ratio over 100% jumping straight to Insolvent. Altman’s own published zones are slightly different from the tool’s rounded cut-offs: below 1.81 is distress, 1.81 to 2.99 is the grey zone, and above 2.99 is safe, from Edward Altman’s 1968 study in the Journal of Finance. The tool scores with 1.8 and 3.0, which is close enough for screening but worth knowing if your score sits on a boundary.
What competing calculators miss
Most pages ranking for “insolvency calculator” answer a different question, and the company-ratio tools that do exist stop at one number:
- Brave Calculator’s insolvency tool computes a single personal figure, liabilities minus assets, aimed at tax-debt relief forms. Useful for that job; it never touches liquidity, earnings cover or bankruptcy prediction.
- iCalculator’s insolvency calculator itemises business assets and liabilities line by line, then stops at net worth and a status line. There are no ratios, no solvency measure and no Z-Score, so a company can look fine on totals while its short-term position is failing.
- UKCalculator’s insolvency test runs the two legal tests (balance sheet and cash flow) with monthly revenue and costs. A fair legal screen, but it produces no ratio analysis and nothing an investor or lender would recognise as a health check.
- Brave Calculator’s solvency ratio tool offers one ratio and, confusingly, prints the equity-ratio formula, (assets minus liabilities) over assets, under the solvency name. This page keeps the two ratios separate and labelled, and uses the earnings-based solvency ratio, (net income + depreciation) over total liabilities.
- Dedicated Altman Z-Score calculators (Whiz Tools, OnlyCalculators and others) compute the Z well, some with the private-firm and non-manufacturing variants, but that is all they compute: no verdict that combines leverage, liquidity and earnings in one place.
- The gap this page fills: three graded modes on one balance sheet, a published points tally behind the verdict, the tool’s own quirks stated on the page, and every number in the worked example reproducible in the calculator above.
What this tool cannot tell you
A Solvent result is a snapshot of book figures, not a clean bill of health, and an Insolvent result is a warning, not a court finding. Four limits matter most.
- No cash-flow test. Companies usually fail because they cannot pay a bill on Friday, not because a ratio crossed a line. This tool has no payment dates, no cash balance forecast and no overdue-debt input, so it cannot run that test.
- Book values, not sale values. Assets are taken at the figures you enter. Property carried at historic cost, or inventory that would fetch half its book value, can swing net worth either way.
- The Z-Score is a 1968 listed-manufacturer model. Altman built it on US public manufacturing firms. Applied to a small private service company, treat it as a rough screen; Altman himself later published recalibrated versions for private and non-manufacturing firms, which this tool does not implement.
- One period only. A single balance sheet says nothing about direction. The same company improving for three years and the same company sliding for three years get the same verdict here.
If the verdict is At Risk or worse, the practical next step is a licensed insolvency practitioner or your accountant, early, while options like restructuring still exist. Directors who keep trading while a company is insolvent take on personal risk in many jurisdictions, and the GOV.UK guide to liquidating a limited company sets out how the formal routes begin in the UK.
Frequently asked questions
It measures a company’s financial health from its accounts: leverage (debt-to-asset and equity ratios), short-term liquidity (current ratio and working capital), earnings cover (the solvency ratio in the upper modes) and, in Altman mode, a bankruptcy-prediction score. It has no monthly income or expense fields and it is not a personal debt checker.
It is one of the two classic tests. A company whose liabilities exceed its assets fails the balance-sheet test and this tool calls it Insolvent. The second test is cash flow: a company with positive net worth can still be insolvent in practice if it cannot pay debts as they fall due, and this calculator does not measure that.
Because the upper modes add more tests to the same points tally. Comprehensive mode adds a solvency ratio check (a point if it falls below 20%), and Altman mode adds the Z-Score as well (two points below 3.0, four below 1.8). The worked example company is At Risk in Basic mode and High Risk in both upper modes for exactly this reason.
The Z-Score is Edward Altman’s 1968 bankruptcy-prediction formula, a weighted sum of five ratios covering liquidity, cumulative profitability, operating earnings, equity cover and asset turnover. In Altman’s original study, scores below 1.81 marked the distress zone, 1.81 to 2.99 was the grey zone, and above 2.99 was safe. This tool scores with the rounded cut-offs 1.8 and 3.0.
That is how the tool is built: with no current liabilities entered it prints 0.00 instead of an infinite ratio, and then scores that 0.00 as weak liquidity, adding two risk points. Leaving current assets and current liabilities blank has the same effect. Enter the real short-term figures, even small ones, before judging the verdict.
No. In Basic mode neither is used. In Comprehensive mode both fields appear, but the solvency ratio is worked out from net income and depreciation only, so changing revenue or EBIT changes nothing there. Both figures only move the result in Altman Z-Score mode, where revenue forms term E and EBIT forms term C.
You can enter personal totals and the basic ratios will still compute, but the tool is designed for company accounts: the Altman mode needs company figures such as retained earnings and the market value of equity, and nothing here applies personal bankruptcy or debt-relief rules. For money owed to you by an insolvent employer, use the insolvency pay calculator instead.
No. The verdict grades one set of book figures at one point in time, using this tool’s own point scores. It does not audit the accounts, test whether bills can be paid next month, or predict the future. Treat Solvent as “no warning signs in these ratios,” and anything worse as a prompt to get professional advice early.
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References
- Altman, E. I. “Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy.” Journal of Finance, 23(4), 1968, pp. 589-609. Formula and cut-offs reproduced in: Beaver, W. H. and Engel, E., Financial Statement Analysis, Chapter 9, “Forecasting Bankruptcy.” Financial Statement Analysis, Chapter 9: Forecasting Bankruptcy (O’Reilly). Accessed October 22, 2026.
- U.S. Securities and Exchange Commission. Beginners’ Guide to Financial Statements. Accessed October 22, 2026.
- UK Parliament. Insolvency Act 1986, Section 123: Definition of Inability to Pay Debts. Insolvency Act 1986, Section 123 (legislation.gov.uk). Accessed October 22, 2026.
- GOV.UK. Liquidate Your Limited Company. Accessed October 22, 2026.
- GOV.UK and Companies House. Accounts and Tax Returns for Private Limited Companies. Accessed October 22, 2026.
- Administrative Office of the U.S. Courts. Bankruptcy Basics. Accessed October 22, 2026.
- Allianz Trade. Solvency Ratios: Definition, Different Types, and Examples. Accessed October 22, 2026.
- United Nations Commission on International Trade Law (UNCITRAL). UNCITRAL Legislative Guide on Insolvency Law. Accessed October 22, 2026.
- The Insolvency Service. Insolvency Service Official Statistics. Accessed October 22, 2026.
- The Gazette. Insolvency Notices: The Official Public Record. Accessed October 22, 2026.