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Glossary

Altman Z-Score

Essential — core valuation theory

What it measures

Bankruptcy predictor combining 5 balance sheet ratios.

Formula

1.2X₁ + 1.4X₂ + 3.3X₃ + 0.6X₄ + 1.0X₅

Benchmark

> 3 safe · 1.8-3 grey · < 1.8 distress

Related metrics

Piotroski F-ScoreNet Debt / EBITDAInterest Coverage

Source

Altman, Journal of Finance (1968)

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