| It’s a financial model to assess bankruptcy risk. |
| Formula: Z-Score = 1.2×(Working Capital/Total Assets) + 1.4×(Retained Earnings/Total Assets) + 3.3×(EBIT/Total Assets) + 0.6×(Market Value of Equity/Total Liabilities) + 1.0×(Sales/Total Assets). |
| Example: Z-score < 1.8 means high bankruptcy risk (e.g., Jet Airways before collapse), while Z-score > 3 means safe (e.g., Infosys). |