In the early 60's Edward Altman, using Multiple Discriminant Analysis combined a set of 5 financial ratios to come up with the Altman Z-Score. This score uses statistical techniques to predict a company's probability of failure using the following 8 variables from a company's financial statements.
The Z-Score formula is a measurement of the financial health of a company and is a powerful diagnostic tool that forecasts the probability of a company entering bankruptcy within a two-year period, based on the data submitted. While reasonably accurate, the Z-Score is not infallible and, thus, should be used primarily as a guide. Confidential data submitted for this calculation will not be saved or used for any other purpose.
Enter the information requested below, using only whole numbers without commas or decimals then click submit to see your company’s Z-Score.
|2.9 and above:||Your company is safe based on these financial figures only|
|2.90 - 1.23:||On Alert. This zone is an area where one should exercise caution|
|Below 1.23:||Good chances of the company going bankrupt within 2 years of operations from the date of financial figures given.|
Please contact Gerke & Associates to discuss how our consulting expertise can benefit your company or to discuss our expanded Business Benchmarking services.