Z
Z-Score Analysis: What it actually means?
Z-score analysis, typically based on Altman’s model, is a quantitative way of estimating the likelihood that a company will experience financial distress by combining several key ratios from the balance sheet and income statement. Consultants use it as an objective screening or early-warning tool alongside qualitative assessments, covenant reviews and cash-flow analysis. It is particularly useful in multi-company groups, banks or investment portfolios where management needs to prioritise attention and remediation. On its own it does not tell you how to fix the problem, but it does highlight which entities need deeper turnaround or credit work. In short, Z-score analysis makes risk monitoring more systematic.
