APPLICATION OF THE ALTMAN Z-SCORE MODEL IN ASSESSING FINANCIAL STABILITY: EVIDENCE FROM A CASE STUDY
APPLICATION OF THE ALTMAN Z-SCORE MODEL IN ASSESSING FINANCIAL STABILITY: EVIDENCE FROM A CASE STUDY

Summary/Abstract: This paper examines the application of the Altman Z-score model as a tool for assessing financial stability and identifying potential risks of financial distress and bankruptcy. In conditions of increased economic uncertainty and market competition, the use of quantitative models for financial analysis has become an important instrument for evaluating the performance and sustainability of business entities. The analysis is based on financial data for the period 2022–2024, derived from the balance sheet and income statement of a selected company. The selected time frame enables the observation of changes in financial performance and the identification of trends reflected through the model. The paper presents the theoretical background of the Altman Z-score model, with emphasis on its structure and the role of key financial indicators included in its calculation. The model combines several financial ratios related to liquidity, profitability, leverage, and efficiency in order to generate a single composite indicator of financial stability. The empirical part of the paper includes the calculation of the individual components of the model and the corresponding Z-score values for each year of analysis. This allows for a detailed examination of the contribution of specific financial indicators to the overall result and their influence on the movement of the Z-score over time. The results show a continuous increase in the Z-score values during the analyzed period, indicating a movement within the zone of financial stability. The improvement in the overall score is mainly associated with the growth of selected financial indicators, particularly retained earnings, sales efficiency, and the market value of capital, which has a significant impact on the dynamics of the model. The findings suggest that the Altman Z-score model provides useful insight into financial stability and can support financial analysis by identifying trends in key indicators and changes in business performance. The results are shaped by the behavior of the financial variables included in the model, which determine the final Z-score value and its interpretation

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