Zmijewski Model

The Zmijewski Model is a financial tool used to assess a company's likelihood of bankruptcy. It combines key financial ratios related to profitability, leverage, and liquidity into a single score. A lower score indicates a higher risk of bankruptcy, while a higher score suggests financial stability. Developed by Edward I. Zmijewski in the 1980s, this model helps investors, creditors, and managers make informed decisions by evaluating the financial health of a business based on its historical performance and financial data.