Definition of Z-score

A statistical method of rescaling and standardising data to enable easier comparison. A Z-score measures the number of standard deviations an observation is away from the mean, or average, of all observations.  A positive Z-score indicates the observed value is above the mean of all values, while a negative Z-score indicates the observed value is below the mean of all values. [1]

A figure that shows how likely it is that a business will fail. The Z-score is calculated using information about the relative levels of a business's assets, sales, profits etc and is correct about 90% of the time in calculating if a business will go bankrupt within one year. [2]

Balance sheets are the most common cause of grief

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