Is there a threat to this company's solvency?

The Altman Z-score is a widely used measure that applies an algorithm that has been found to have useful predictive value on the likelihood of a business going bankrupt. Keep in mind that this is a likelihood and not a prediction. From a company's financials, it may look likely that bankruptcy looms, but the management may well succeed in improving matters. However, for the thinking investor, it's wise to keep an eye on this number and have an insight into a company's solvency. You will find the score on our stock pages, under the Essential checks tab. Here's a complete description of how the Altman Z-score works. Z- score formula was developed by Edward Altman, Assistant Professor of Finance at New York Un

This article was originally published on September 19, 2018.