Naturally, the formula isn’t perfect. The Altman Z-Score doesn’t do the best job accounting for deferred revenue, which can make software companies in particular look worse off than they really are.
Altman considered companies with an Altman Z-Score over 2.6 “safe,” companies with a score between 1.1 and 2.6 in a “gray” zone, and companies with a score under 1.1 “at risk.” In brief, the formula ...
For decades a simple mathematical formula called the Z-Score has been the industry standard for predicting the likelihood that a company will file for bankruptcy protection. But after 40 years is the ...
Naturally, the formula isn’t perfect. The Altman Z-Score doesn’t do the best job accounting for deferred revenue, which can make software companies in particular look worse off than they really are.