Altman Bankruptcy Model

The Altman Z-score is a financial tool used to assess a company's likelihood of bankruptcy by analyzing key financial ratios. It combines variables like profitability, leverage, liquidity, and activity to produce a single score. A higher Z-score indicates a lower risk of bankruptcy, while a lower score suggests higher risk. Essentially, it helps investors and creditors evaluate the financial health of a business and its potential for solvency based on its financial statements. The model is particularly useful for predicting distress in manufacturing and industrial firms.