Abstract
Over the years, many models have been suggested and tested for predicting bankruptcy. These include ratio analysis models such as Beaver (1966, 2005), discriminant analysis models such as Altman (1968, 2006), regression models such as Ohlson (1980) and others. The Altman model (1968, 2006) is one of the most influential models in the area of bankruptcy prediction. However, the Altman model is not successful in predicting bankruptcy all of the time. The Z-Score predictive model, introduced by Altman in 1968, is a widely used and cited model for predicting bankruptcy, and uses a combination of several financial ratios to calculate the "Z-score", which value indicates the likelihood of future bankruptcy of the company under examination. Altman estimated the model using multiple discriminant analysis to derive a linear equation that discriminates between bankrupt and non-bankrupt companies. Multiple empirical studies have been done by Altman and others to evaluate the model. In this study, the Z-Score model will be evaluated using financial data from public companies that started reorganization proceedings under Chapter 11 of the bankruptcy code from 2000 to 2005.