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Z-Score

   

A statistical measurement used to describe a value’s relationship to the mean of a group of values, often used in credit risk assessment to predict bankruptcy.

The Z-Score is a statistical measure that expresses how far and in what direction a data point deviates from the mean of a data set, measured in terms of standard deviations. In finance, particularly in credit risk assessment, the Z-Score (specifically Altman’s Z-Score) is used to predict the probability of bankruptcy for a company, helping investors and creditors gauge financial health.