Altman's Bankruptcy Prediction Model

Altman's Bankruptcy Prediction Model is a financial tool that assesses a company's likelihood of bankruptcy using five key financial ratios derived from its balance sheet and income statement. These ratios analyze aspects like profitability, leverage (debt levels), liquidity, and asset management. By combining these ratios into a weighted score, the model provides a clear indication of financial health, helping investors, creditors, and management identify early signs of financial distress. It acts as an analytical gauge, enabling informed decisions to prevent potential insolvency.