Thursday, December 21, 2006
Using the Altman Z-Score to Check the Financial Quality of your Stocks
Edward Altman invented the Altman Z-Score in the 1960's to determine the statistical probability of a company going bankrupt. The Creditguru.com has a nice interactive Z-score calculator that allows you to type in eight variables to determine the likelihood of failure. According to the site, a score under 1.3 means "Probability of Financial embarrassment is very high." I tried it for Ford Motor Co. (stock symbol F on the NYSE) and came up with a score of .38.
Posted by Stockerblog at 2:35 PM