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# Z-score Calculator

The Altman Z-score calculator allows you to calculate the z-score of a sample set of representational data to define the probability of risk in terms of financial health of a business and / or investment opportunities.

 Raw Score (x): Population Mean (μ): Population Standard Deviation (σ):
 Z-score is: 0.9091 ## What is Z-score?

A Z-score, also known as the standard score, is a measurement of deviation used is statistics and probability to indicate the distance between an observation and the mean value of a group of integers.

## Can a Z-Score be negative?

Yes, a Z-Score can be negative. When a Z-score is negative it indicates that the score is below the mean, this is also known as a left tail z-score whereas a positive z-score is known as a right tail Z-score.

## How to calculate the Z-score

You can use the Z-Score Calculator above or use the following Z-Score Formula:

Z = (x - μ) / σ

Where:

## What is the Z-score use for?

The Z-score is a used in statistical analysis, typically by investors as a means of identifying the financial health of a specific company, group or associated trading stock. The advantage of the Z-score being that it allows for data sampling rather than full data analysis.

### Is the Z-score purely used by Financial Investors?

No, in fact the z-score was initially designed to be a more efficient means of identifying how close to bankruptcy a specific company was. The Z-score was created by Edward I. Altman, Professor of Finance, Emeritus, at the New York University Stern School of Business. Edward Altman published the "Altman Z-score" formula for predicting bankruptcy in 1968.

### Is the Z-score an effective way of measuring financial health?

Studies have shown that the Alman Z-score formula has a reliability in the range of 80-90%. As such the Altman z-score has become a key tool in the portfolio of investment managers and hedge funds and leveraged to ascertain risk in certain investments and help shape their investment strategies and/or adjust interest rates when investing in higher risk companies (those who z-score indicates their financial health is not as good as it could be). The Altman Z-score can therefore be considered a statistical tool that allows visability of the probability of a certain event occurring based on a representational sample of data.

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