Zmijewski Test

The Zmijewski Test is a financial tool used to assess a company's likelihood of bankruptcy. Developed by economist Stanisław Zmijewski in the 1980s, it combines various financial ratios—such as profitability, liquidity, and leverage—into a single score. A lower score indicates a higher risk of bankruptcy, while a higher score suggests financial stability. This test is particularly valuable for investors and analysts to evaluate the health of a business and make informed decisions. It's one of several tools in financial analysis, helping to predict potential financial distress.