Altman Z score calculator
- The Z-score is a company scoring tool establishing a probability of failure over two years.
- It was created by the American Edward Altman in the 60s and has since been improved.
- It uses statistical techniques to predict the probability of business failure using eight criteria from the financial statements of a company.
- It is necessary to bring the latest financial statements of the analyzed company to calculate it.
Z score interpretation
- The higher the score, more the probability of failure is low. A score above 2.9 is very good (2.6 for non-manufacturing).
- A score below 1.23 (1.1 for non-manufacturing) indicates a very high probability of failure.
- Scores between the two above limits represent a gray area for medium-sized companies where the risk is present but not very strong.