Application Of Z-Score Model For Financial Health Checkup

Abstract

Various stake holders such as bankers, financial institutions, investors, employees, government etc. need to know about the financial health of the business. Financial Analysis and Financial Statements are the two main tools which can help the future availability and utilization of the firm. For arriving at the conclusions about the financial health of any business, there are several tools available. Out of all of them ratio analysis is one of the most widely used tool. Despite ratio is a powerful tool, combining different ratios into a single measurement is not possible. Prof. Edward I. Altman has made an effort to combine these ratios into a single model. This model is popularly known as ‘Z score model’ which is used to predict financial health of the business. The present paper is based on the secondary data of the company. The researcher have attempted to apply Z score model to check the financial health of J.K. Cement, one of the leading Cement Company. The analysis showed the good results of the company in terms of liquidity, profitability, long term solvency, operating efficiency and sales generating capacity.