what is the altman z score 
the altman z score is the output of a credit strength test that gauges a publicly traded manufacturing company s likelihood of bankruptcy investopedia laura porterunderstanding the altman z scorethe altman z score a variation of the traditional z score in statistics is based on five financial ratios that can be calculated from data found on a company s annual 10 k report it uses profitability leverage liquidity solvency and activity to predict whether a company has a high probability of becoming insolvent nyu stern finance professor edward altman developed the altman z score formula in 1967 and it was published in 1968 over the years altman has continued to reevaluate his z score from 1969 until 1975 altman looked at 86 companies in distress then 110 from 1976 to 1995 and finally 120 from 1996 to 1999 finding that the z score had an accuracy of between 82 and 94 1in 2012 he released an updated version called the altman z score plus that one can use to evaluate public and private companies manufacturing and non manufacturing companies and u s and non u s companies one can use altman z score plus to evaluate corporate credit risk the altman z score has become a reliable measure of calculating credit risk 2