The Altman z-score is a measure of a company's financial strength that uses a weighted sum of several factors. Although it is sometimes referred to simply as z-score, this is can be ambiguous. It was devised by Edward I. Altman

Although many measures of financial strength exist the z-score is different to most in that it combines multiple factors, and has been proved to be successful as a predictor of bankruptcy.

The weightings used for each factor have changed significantly since they were first estimated in 1968. The original model was:

Z = 1.2X_{1}+ 1.4X_{2}+ 3.3X_{3}+ 0.6X_{4}+ X_{5}

where:

X_{1} is *working capital* ÷ *total assets*

X_{2} is *retained earnings (profit)* ÷ *total assets*

X_{3} is *EBIT* ÷ *total assets*

X_{4} is *market value of equity* ÷ *book value of debt*

X_{5} is *sales* ÷ *total assets*

This is slightly different from the z-score as it appears in Altman's original paper because it uses fractions rather than percentages for each number: e.g. 0.2 rather than 20 for a ratio that is usually expressed as a percentage. The spurious accuracy of multiplying X_{5} by 0.999 instead of leaving it at one has also been omitted.

A more recent estimate by Altman (in 2000) is significantly different:

Z = 0.72X_{1}+ 0.85X_{2}+ 3.1X_{3}+ 0.42X_{4}+ X_{5}

Once again, this has been rounded to two significant figures.

Altman's 2000 paper revisits the z-score and his proprietary zeta model.

Other single number measures of financial strength exist, including Piotroski's F-score.