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Audit the solvency. Calculate the Altman Z-Score to predict the probability that a company will go bankrupt within two years.
Step-by-step breakdown of the underlying equations.
A Z-score of 2.98 places the company in the Grey (Caution). Scores below 1.81 historically indicate a high probability of bankruptcy, while scores above 3.0 are considered financially stable. This model is widely used by credit analysts and institutional investors to screen for distress.