Functions for Predicting Business Bankruptcy

This submission contains three .m files with functions that calculate the different z scores.
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Updated 12 May 2015

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These files were written by Tyler L. Coye (2015)
based on Altman's Z Score(1966)
Function gives the calculated Z Score as well as determines the status of a company as being either 'healthy', 'intermediate' or bankrupt. The determination of each status depends on which Z Score is used, so it is necessary that you choose the correct one.
The .zip file contains three .m files which calculate the 'general use' Z Score,
the 'private mfg' Z Score and the 'public mfg' Z Score. For Public Businesses use
the function ZScorepub and for Private Businesses use the function ZScorepvt.
For 'general use' Z Score, use ZScoreGen. This function does not require Sales or Market Equity Data.

The Z Score predicts Business bankruptcy.

Use balance sheet figures from the end of the reporting period for all Z Score
calculations.

The Z Score model is a tool that can complement your other analytical tools.

The Z Score is not intended to predict when a firm will file a formal
declaration of bankruptcy in a federal district court. It is instead a measure
of how closely a firm resembles other firms that have filed for bankruptcy. It
is a measure of corporate financial distress, a measure of
economic bankruptcy.

How Accurate is the Z Score?
Altman found that about 95% of the bankrupt firms were correctly classified.

To Use the functions effectively you will need to find the following information of the business you wish
to run the functions for:

WC = Working Capital
TA = Total Assests
RE = Retained Earnings
EBIT = Earnings Before Interest and Tax
MktValEq = Market Value of Equity
TL = Total Liabilities
NW = Net Worth
S = Sales

The function outputs are defined as follows:
Z = Z Score for Public Mfg ( Publicly traded companies)
Z1 = Z Score for Private Mfg ( Private companies)
Z2 = Z Score General Use

I would love to hear your feedback.

Cite As

Tyler Coye (2024). Functions for Predicting Business Bankruptcy (https://www.mathworks.com/matlabcentral/fileexchange/50831-functions-for-predicting-business-bankruptcy), MATLAB Central File Exchange. Retrieved .

MATLAB Release Compatibility
Created with R2014b
Compatible with any release
Platform Compatibility
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Version Published Release Notes
1.3.0.0

Made minor changes to the functions.

1.2.0.0

I updated the ZScorepvt function. I caught an error. MktValEq should not be an input for the private mfg function.

1.1.0.0

Updated Description Text.

1.0.0.0