ORIGINAL Z-SCORE Definition

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ORIGINAL Z-SCORE (For Public Manufacturer) If the Z-Score is 3.0 or above - bankruptcy is not likely. If the Z-Score is 1.8 or less - bankruptcy is likely. A score between 1.8 and 3.0 is the gray area. Probabilities of bankruptcy within the above ranges are 95% for one year and 70% within two years. Obviously a higher Z-Score is desirable.

Learn new Accounting Terms

POINTS are additional fee paid to a lender. Points are generally stated as a percent of the total amount borrowed and are in essence prepaid interest. Points paid can be deducted over the life of the loan.

COMPOUND INTEREST PRINCIPLE is where the interest is computed on principal plus interest earned in previous periods.

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