Altman's Z-score is introduced in an Excel framework to produce a quick calculation of the Z-score with actual financial data available through the Internet. The lesson plan developed is easily introduced with topics covering ratio analysis, financial risk, bond rating changes, and bankruptcy. Given the wide use of the Z-score in practice to evaluate credit risk (or bankruptcy risk), the lesson plan produces a skill set that is very marketable.
Copyright © 2006 Financial Education Association. This article first appeared in the Journal of Financial Education 32 (Summer 2006): 97-102.
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Arnold, Tom, and John H. Earl, Jr. "Applying Altman's Z-Score in the Classroom." Journal of Financial Education 32 (Summer 2006): 97-102.