Altman Z-score

[Roadmap2Retire]

In my continued education of investing methods and metrics, I came across Altman Z-score and looked really interesting. Seems like a great way to quickly judge the overall financial condition of a company.

Out of curiosity, do other DGIs pay attention to this score?

The Altman Z-score

[navyasw02]

Interesting, but I found an article from April saying MAT was a good investment based on its Altman Z-score and that was evidence enough for me to stop looking at this seriously.

[rapidacid]

Yes, Altman Z-Score has a 5% weighting in my scoring criteria

[Caversham]

I'm familiar with the ratio, and use it primarily to filter out companies when performing a screen. It looks like rapidacid utilizes this metric similarly.

I've found the metric less useful when seriously analyzing a company. If I've gotten to the "serious analysis" stage, then I will already have a firm conviction that the company is very unlikely to declare bankruptcy.

(07-26-2015, 10:30 AM)navyasw02 Wrote: Interesting, but I found an article from April saying MAT was a good investment based on its Altman Z-score and that was evidence enough for me to stop looking at this seriously.

Isn't this is like saying: "Enron falsified financial statements, so I no longer look at financial statements when analyzing a companies."

[navyasw02]

(07-26-2015, 03:08 PM)Caversham Wrote: I'm familiar with the ratio, and use it primarily to filter out companies when performing a screen. It looks like rapidacid utilizes this metric similarly.

I've found the metric less useful when seriously analyzing a company. If I've gotten to the "serious analysis" stage, then I will already have a firm conviction that the company is very unlikely to declare bankruptcy.

(07-26-2015, 10:30 AM)navyasw02 Wrote: Interesting, but I found an article from April saying MAT was a good investment based on its Altman Z-score and that was evidence enough for me to stop looking at this seriously.

Isn't this is like saying: "Enron falsified financial statements, so I no longer look at financial statements when analyzing a companies."

Not really. One is the illegal fraudulent reporting of source data which drives bad analysis, and the other is misuse of an analytical tool on good data.