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  • Category: Stock Market

    What is Altman Z-score? What is Piotroski F-Score?


    Have a query about new terms uses in stock markets? Looking out for information online? Find suggestions from experts on this page.

    I have minimum understanding of various ratios used to evaluate stocks. I know what is ROE. I understand EPS, P-E, Dividend Yield, D-E and other well-known ratios. But recently I have heard two new terms, viz., Altman Z-score and Piotroski F-Score. These two criteria are also used to judge the suitability of stocks by the experts and mutual fund managers. However, I have not understood these two terms very well.

    I request the ISC experts to kindly explain these two terms.
  • #145192
    Altman Z-score is used for predicting bankruptcy. This formula was published in 1968. This formula is used to predict the probability that a firm will go into bankruptcy within two years or not. This score is used to predict corporate defaults and also on financial distress status of company.This score uses multiple corporate income, expenditure, balance sheet values to measure the financial health of a company.

    Piotroski F-Score is a number between 0-9 which is used to assess strength of company's financial position.Financial investors use this score to find best value stocks.This score is calculated on the basis of Profitability,Leverage, Liquidity, Source of Funds and Operating Efficiency.


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