Altman Z-Score: What It Is, Formula, How to Interpret Results

Summary: developed by Edward Altman in 1967, 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.