What is a 'ZScore'
A Zscore is a numerical measurement of a value's relationship to the mean in a group of values. If a Zscore is 0, it represents the score is identical to the mean score.
Zscores may also be positive or negative, with a positive value indicating the score is above the mean and a negative score indicating it is below the mean. Positive and negative scores also reveal the number of standard deviations the score is either above or below the mean.
BREAKING DOWN 'ZScore'
Zscores also reveal to statisticians and traders if a score is typical for a specified data set or if it is atypical. In addition to this, Zscores also make it possible for analysts to adapt scores from various data sets to make scores that can be compared to one another accurately. Usability testing is one example of a reallife application of Zscores.
This term is more commonly known as the Altman Zscore. Edward Altman, a professor at New York University, developed and introduced the Zscore formula in the late 1960s as a solution to the timeconsuming and somewhat confusing process investors had to undergo to determine how close to bankruptcy a company was. In reality, the Zscore formula Altman developed ended up providing investors with an idea of the overall financial health of a company.
The Altman ZScore Formula
The Altman Zscore is the output of a creditstrength test that helps gauge the likelihood of bankruptcy for a publicly traded manufacturing company. The Zscore is based on five key financial ratios that can be found and calculated from a company's annual 10K report. The calculation used to determine the Altman Zscore is as follows:
ZScore = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
In this equation:
A = Working capital/total assets
B = Retained earnings/total assets
C = Earnings before interest and taxes (EBIT)/total assets
D = Market value of equity/total liabilities
E = Sales/total assets
Typically, a score below 1.8 indicates that a company is likely heading for or is under the weight of bankruptcy. Conversely, companies that score above 3 are less likely to experience bankruptcy.
Altman ZScore Plus
Altman developed and released the Altman ZScore Plus in 2012. This formula is used to evaluate both public and private companies and can be used for nonmanufacturing companies as well as manufacturing companies. The ZScore Plus is suitable for companies in the United States as well as companies outside of the United States.

Altman ZScore
The output of a creditstrength test that gauges a publicly traded ... 
CutOff Score
The lowest possible credit score one can have and still qualify ... 
Precision Score
A number used by the TransUnion Credit Bureau to quantify the ... 
Beacon Score
A number generated by the Equifax Credit Bureau to rank an individual's ... 
FICO Score
A type of credit score that makes up a substantial portion of ... 
Credit Mix
The types of accounts that make up a consumer’s credit report. ...

Fundamental Analysis
What's a ZScore?
In statistics, Zscore refers to how many standard deviations a particular data point is from the mean of the data. A Zscore of 1 means the data point is one standard deviation from the mean. ... 
Markets
How To Calculate A ZScore
Investors need to know how to detect signs of looming bankruptcy. The Zscore can help. 
Stock Analysis
Retail's Magic Numbers
The ZScore is a formula for predicting whether a company will go bankrupt within two years. Look at some retailer/wholesalers to see what's happened in the past two years. 
Stock Analysis
Private Equity Kills Balance Sheets
We'll use the ZScore to illustrate how private equity is hurting the financial footing of acquired companies. 
Fundamental Analysis
Avoid These Overvalued Blue Chips with Poor Financials (APA, CBS)
When you are looking for bargains in the stock market, limit your buying to stocks with a verified strong fiancial condition. 
Credit & Loans
How High Is a 'Good' Credit Score?
How high of a credit score do you need to get a home mortgage or buy a car? Read on for some actual numbers. 
Savings
What Your Credit Score Means for Your Love Life
Wondering if your significant other wants to commit and is reliable? The Fed might have the answer. 
Credit & Loans
Can You Hit The Highest Credit Score?
Yes – it's doable. But the real question is, does it matter? 
Credit & Loans
Getting Your Credit Score from a Bank
That allimportant, oncesecret number is now easy to obtain from financial institutions and credit card companies. 
Credit & Loans
Is It Worth Paying To Check Your Credit Score?
Generally, a free credit report is all you need. If you've had some credit issues, it may be worth buying your credit score to get a finer level of detail.

What does a ZScore tell a stock analyst about the health of a company?
Learn about the Altman Zscore, what the Zscore measures and what it indicates to an analyst about the health of a company. Read Answer >> 
How can an investor use the ZScore to compare investment options?
Learn about the Altman Zscore, how it is calculated for public and private companies and how investors can use the measure ... Read Answer >> 
What is the difference between standard deviation and z score?
Understand the basics of standard deviation and Zscore; learn how each is calculated and used in the assessment of market ... Read Answer >> 
Do I need to know all three of my credit scores?
Find out why it is important to know all three of your credit scores and how these scores can affect credit approvals for ... Read Answer >> 
What's the difference between a credit rating and a credit score?
Learn about the differences between credit ratings and credit scores, and review how these expressions of creditworthiness ... Read Answer >> 
Does a free credit report show your credit score?
Find out how you can obtain your credit score, and find out whether your score is included in your free annual credit reports. Read Answer >>