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Do you Believe an Altman or Modified Altman Algorithm would be Effective as a Component of a Management Performance Measurement System? How so?
Calandro stated that Altman’s Z-score could be a good source for analyzing financial performance of an organization by testing its distress level. The Z-score model has been accepted as a financial distress model for almost four decades, leading in areas such as credit risk analysis, merger and acquisition target analysis, and turnaround management. For credit risk analysis, the Z-score helps to score applicants that are applying for loans. For merger and acquisition, the Z-score helps to recognize companies with severe cash problems. Stock brokers use this to determine if a company is a good investment for merging and acquiring.
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