The Altman Z-Score is a classic multivariate statistical model used to calculate a firm’s financial health, specifically tailored to predict the likelihood of bankruptcy within two years.

Threshold Zones (Manufacturing Model)

• Safe Zone (Z > 2.99): The firm exhibits strong financial health and a low risk of distress.
• Grey Zone (1.81 <= Z <= 2.99): The firm exhibits moderate financial distress risk and requires close monitoring by analysts.
• Distress Zone (Z < 1.81): The firm has a high probability of entering bankruptcy within 24 months.