One of the tools used by financial analysts to assess the viability of a business is Altman’s Z-score. Corporate failure is linked to a series of actions which are related to a company’s fundamentals which long-term reflect the likelihood of a business going bankrupt. According to this statement, Prof.E.I.Altman developed in 1968 a multivariate statistical model considering a linear combination of several financial ratios that allow to differentiate between failing companies a non-failing ones.
The result obtained from the model gives what is known as the Z-score. Low values indicate the company has a high probability of failing while high values predict the company is less likely to fail.
The majority of the applications doing Altman´s Z-score calculation miss the opportunity to show the user an approximation of the probability of default by transforming the score into a percentage (process this app does by using the Normal statistical distribution).