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Very High Z Score: Is a Z score of 1000 Possible?
Aditi
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A very high Z Score is Possible!
Manoj Jayale, Manager, India, Member
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Altman’s z score measures financial health of a firm. A high Z-score means less possibility of financial distress. A firm can achieve a higher Z score than a usual one only in monopolistic competition.
In that case others will jump into that industry and pull the fiurst firm towards an average Z score in the long run. So a high Z score is possible, but a Z score of 1000 is impossible in any regular market.
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Be Careful with Universal Formulas
claudio pizzi, Business Consultant, Argentina, Member
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I advise you to be very careful with the application of these relationships. These formulas were designed for a group of companies, a statistical sample. The secret is in the formula variables (0.01, 0.02, 0, xx, etc.) used to multiply the coefficients. The coefficients (ratios) used to construct the formulas might be right (perfect statistical correlation between them), the problem is the calibration appears. You need to use a statistical program to adjust those numbers (0.01 - 0.02, etc) in its customer base.
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Special Interest Group Leader
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