Chroma Investing

Value Investing for beginning & small time investors and the value investing strategies of Graham & Klarman

Altman Z score Redux – Covering your back side better

Altman Z score has been around since the 1960’s and I have posted about it previously. Originally it was set up and measured the risk of bankruptcy among manufacturing firms. It turns out that in subsequent studies it was found that the original Altman Z score might be under reporting bankruptcies among non-manufacturing firms. Altman Z may be a great tool but it must be used correctly.

Altman Z score – Help Protect your Back Side

Think of this post as a Christmas present, even though this knowledge has been around for a long time. When you are slumming in the Low Book Value world you need to make sure you are protecting your down side. After all there is a reason most companies have been humbled by the market. The Altman Z-score can be a tool to help you avoid the worse of the companies in the value world.

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