Altman Z-Score
A bankruptcy-risk indicator combining five balance-sheet and earnings ratios into a single figure; the lower it is, the higher the probability of insolvency within two years.
Edward Altman built it in 1968 from a sample of industrial companies that went bankrupt and others that didn't, looking for which combination of ratios separated them. It weighs working capital, retained earnings, operating profitability, market value over liabilities, and asset turnover. Classic reference points: above 3 is the safe zone, 1.8 to 3 the grey zone, below 1.8 the distress zone.
The limits matter as much as the number. The original model is calibrated on listed manufacturers; for everything else there's the Z'' variant, applied where appropriate. In banks and financials it doesn't apply at all. And because it includes market value, a sharp price fall worsens the score on its own: in part it measures what the market already fears, not only what the accounts say.
Where to see it on ValuatePad
Year by year, for every company, in the tab Quality scores.