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    I began to discount the impact of the Z-score 25 years ago when I first began analyzing companies for commercial banks.

    The Z-score was developed to determine the likelihood of bankruptcy based on analysis of small manufacturing companies based in the Midwest. My assessment of the statistic showed that it didn't properly identify the likelihood of bankruptcy for service companies, real estate investment firms, technology companies, telecommunications firms, airlines, transportation companies, or a myriad of other firms that are part of the business landscape now, but didn't exist when the formula was devised.

    I agree with Infinitus: Despite the hits, I believe the Z score is obsolete when identifying the risk of bankruptcy for all but a narrow band of companies that are true vertically integrated manufacturing entities.

    As we know, most of those companies have moved to China.
    Jul 10 02:22 am |Rating: +3 0 |Link to Comment
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