How can I find out z-score from financial statement or balance sheet? Can you describe in detail how do i find out all the numbers i need for it? For example for gross profit ,argin I need gross profit to divide with sales. How can I do z-score? Thank you

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 30GI
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How can I find out z-score from financial statement or balance sheet? Can you describe in detail how do i find out all the numbers i need for it? For example for gross profit ,argin I need gross profit to divide with sales. How can I do z-score? Thank you

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Step 1

 Z-score

The Z-score is used as a tool to determine the financial position and health of a company based on a formula which is a combination of five financial ratios. The z-score is used to understand the risk of bankruptcy for a company based on the probabilistic model. The Z-score introduced first by Altman helps to gauge and understand the credit strength of a publicly-traded manufacturing firm. The combination of liquidity, solvency, profitability, activity, and leverage helps to know the probability of a company becoming insolvent.

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